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Monthly Archives: April 2012

Gittins makes an important point [in the video]– from a macro perspective, the total amount spent on discretionary goods will stay the same unless consumers decide to borrow more to purchase goods.

But that is exactly why macroeconomics and microeconomics are considered separate fields. Firstly, people can spend more on retail than on other sorts of consumption. And they can switch their consumption from service-free online retail to bricks and mortar retail stores whose competitive advantage lies in their ability to offer personalised service to customers. If customers want to shop on weekends, then penalty rates which restrict retailers offering weekend shopping at equal prices is artificially limiting physical store’s competitive advantage relative to online shopping. Plus, you can make arguments about the non-monetary benefits of spending time with family, but there are also the non-monetary benefits of going to the bank or the post office on weekends rather than taking time off work. Or of being able to go shopping with friends on weekends.

And that is why Ross Gittins should stop writing about economics. Or at least get a degree in economics before continuing as the Herald’s chief economics columnist. Assuming that discretionary spending is equal to retail spending is just a huge logical error that ought not be forgiven.