Last week the treasurer Scott Morrison told an audience in the USA that not only would interest rate cuts no longer have any impact in Australia, but neither would any fiscal stimulus. It was an extraordinary statement at a time when the outlook is for below average growth.

The treasurer has resorted to faith in the private sector to solve our problems while at the same time saying the private sector is not investing.

It’s almost become a cliché to talk about the new normal of low economic growth since the GFC, but we shouldn’t become accepting of it.

The reality is, what we are experiencing now is abnormal growth compared to what we have experienced at any time since the second world war.

This week US economist Narayana Kocherlakota posted an interesting graph trying to explain why so many Americans feel poor.

He looked at the 10 yearly change in GDP per capita since the second world war.

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Now I am perhaps the number one ticket holder of the “GDP does not tell us everything club”, but the growth of American GDP per capita over the past decade is quite stunning.

When GDP is growing well, there can still be larger sections of the economy doing badly, but when it is growing slowly there is rarely any hidden “good news” – and certainly none relating to the poor sections of society. And GDP per capita is a good rough guide for national living standards.

Kocherlakota found that since the second world war, American GDP per capita had never grown by less than 10% in any 10 year period. And yet since 2009, 10 year growth has never been above that rate:

It is a dramatic display of what the IMF talks about when it suggests advanced economies in the world are experiencing subdued growth.

The ABS doesn’t have quarterly GDP per capita data before 1973 so we can’t do the same times series for Australia, but we can compare the 10 year growth since 1983:

While living standards here have not slowed as fast as in the USA, it is worth noting that the current 10 year growth in GDP per capita is slower than any time since the horror recession in 1982-83.

Now of course looking at 10 year intervals can also hide a lot – in 2006 our economy was booming. So a look at five year intervals might reveal a bit more:

This measure certainly shows the depth of the USA recession, and how Australia missed out on those horrors. But even still, the past five years has seen our living standards grow at a level more associated with a recession than either an average or strongly growing economy.

More surprisingly, in the past five years, Australian and USA GDP per capita has grown by the same amount. That is because while currently our GDP per capita is growing faster, for most of the past three years, and even going back to 2010, that has not been the case:

Other than being a nice little history lesson, that would be interesting, but when we look at where the IMF has us projected to be up to 2021, it looks like the past five and 10 years are not an aberration, but the start of a trend:

The IMF would have Australia’s GDP per capita not growing above 2% in any one calendar year in the next five years – a stretch we haven’t experienced any time since the second world war.

So what is our treasurer’s response?

Well it is clear from the speech Scott Morrison gave he wants to get investment going – his speech was essentially an advert to foreign investors.

But the speech also touched on specific ways to get growth going. He made a good point – namely that with interest rates so low, monetary policy is basically done.

The RBA has been saying this for a long while now (and so have I). But Morrison then went further. He argued that “while so much of the global economic discussion focuses on monetary and fiscal stimulus, we believe that these options have largely exhausted their effectiveness, at least from an Australian perspective.

Astonishingly our treasurer is telling the world that the two biggest tools available to spur growth no longer work.

How’s that for an invitation to come invest?

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Instead he believes private investment (despite also admitting investment is not responding in this environment) will do the trick and so too will “trade”.

Now trade is certainly good for economic growth, but anyone believing the Trans Pacific Partnership (which is now unlikely to go forward) or our free trade agreements will do much (if anything) to improve growth are really off with the fairies.

At best (the very best) the impact will be marginal.

Morrison also suggests that his “10-year enterprise tax plan” will help work wonders. Except his own treasury modelling suggests the majority of the benefits will only come once the full cut to 25% occurs for big businesses – and that isn’t scheduled to occur until 2026-27.

It’s all pretty lame, and fairly despairing if you were hoping that the new normal might be abnormal.