Project Olson.

The bottom line of economic performance: real output per person, stripped of inflation and population growth. Olson’s central prediction was that the accumulation of special-interest groups would slow growth in long-stable societies — not by lowering the level of output overnight, but by steadily eroding the rate at which living standards advance. The same capital and know-how can deliver very different growth outcomes depending on how readily an economy can reassign resources to their most productive use. Both countries already publish this series indexed to 2000 = 100, so the chart compares trajectories directly: a line that has climbed further above 100 has raised living standards faster since 2000. Because the series are in real volume terms, currency conversion is irrelevant to the growth comparison — a common currency or PPP adjustment would matter only for comparing levels of income, which this chart does not do. Starting points differ, so a higher line does not mean a wealthier country.

The consumer price index measures inflation using the year-ended rate of change in the price of a representative basket of household goods. In Olson’s frame, persistent inflation can be a signature of distributional conflict: when coalitions push for larger shares without a corresponding rise in what the economy actually produces, the contest shows up in prices. Shown in its native units, per cent per year. Headline CPI is used for all countries. Australia additionally publishes underlying measures — a trimmed mean, plus tradeables and non-tradeables — which appear only in Australia’s single-country view, not in the cross-country comparison.

Housing costs measured against general inflation — the price of shelter relative to the all-groups CPI. Housing is where Olson’s logic bites hardest: land use is governed by a dense thicket of local coalitions — zoning boards, incumbent homeowners, planning professions — whose interest in restricting supply translates directly into higher prices. Where such groups are entrenched, housing absorbs a growing share of income regardless of how fast the rest of the economy grows. A line rising above 100 means housing has outpaced general inflation since the common March 2000 base; a line below means it has lagged. Methodology differs: Australia tracks rents and new dwelling purchase costs separately, each relative to CPI; New Zealand tracks rents and purchase of housing relative to CPI.

The gross national expenditure deflator — the broadest measure of domestic price inflation, capturing price changes across everything a nation buys, consumes and invests, regardless of where it was produced. Unlike the CPI, it includes capital goods and government purchases, offering a wider aperture on inflationary pressure. Shown in its native units, per cent per year.

Wages adjusted for the cost of living — whether the pay packet buys more or less over time. Olson’s collective-action logic cuts both ways here: organised labour can capture productivity gains as higher pay, but where entrenched insiders dominate, wage setting can also freeze out newcomers and slow the reallocation of labour to its most productive use. A line above 100 means real wages have grown faster than the cost of living since the base year. Methodology differs materially between countries and the series are not directly comparable in level, only in direction.

The share of the labour force without work and actively seeking it. Olson’s insider-outsider dynamic is central here: where established workers are well organised, wages and conditions can be set at a level that keeps newcomers out, leaving unemployment persistently higher than it need be. The longer such arrangements persist, the more hysteresis sets in — the unemployed lose skills and connection to work, and a cyclical problem becomes structural. Shown in its native units, per cent of the labour force.

A composite of economic discomfort — unemployment plus inflation, less the growth in real income per head. The subtraction of real income growth recognises that unemployment and inflation are less painful when incomes are rising fast enough to absorb them. Olson would recognise the ingredients: each captures a different way in which distributional conflict and institutional rigidity show up as lived hardship. Shown in its native units, per cent. Methodology differs: the real-income deduction uses real net disposable income per capita in Australia and real earnings growth in New Zealand.

The ratio of export prices to import prices — how much a country’s exports buy of what it imports. A rise means more foreign goods for the same effort; a fall means the reverse. Olson’s framework is mostly domestic, but terms of trade shape how much room a country has to absorb its internal rigidities: favourable terms of trade can mask sclerosis, letting a sclerotic economy live beyond its means, while adverse terms of trade expose it. Indexed to 100 at the common base year. The underlying construction (an export/import price ratio) is comparable across countries, though source index periods differ.

The real effective exchange rate — a trade-weighted measure of a currency’s purchasing power, adjusted for relative prices. It captures competitiveness: a rise means domestic goods have become more expensive relative to foreign ones, a fall the reverse. Sclerotic economies, slow to adjust, tend to leak competitiveness over time. Indexed to 100 at the common base year, rebased from the original 2020 = 100 publication basis. Methodology is comparable: both series are broad, trade-weighted REERs published by the Bank for International Settlements.

The real cost of borrowing — a nominal interest rate minus consumer price inflation. It measures the true burden of debt service: high real rates squeeze borrowers and reward savers; low or negative real rates do the opposite. In an Olsonian world, entrenched financial interests shape where this burden falls. Shown in its native units, percentage points. Methodology differs: Australia uses a standard variable mortgage rate; New Zealand uses a 90-day bank bill rate. The series sit at different points of the yield curve and are not directly comparable in level, only in direction.

Government’s claim on the economy — general government final consumption as a share of GDP, covering all levels of government. This follows the SNA/OECD “general government consumption” basis so that the series are comparable across countries. Olson’s argument was clearest here: public spending is both a symptom and an instrument of distributional coalitions. As special interests multiply, the state is drawn into transferring and administering resources on their behalf, and the share of output routed through government rises. Whether that rise reflects healthy collective provision or capture by rent-seeking groups is the central question. Shown in its native units, per cent of GDP. Australia’s single-country view also shows the broader fiscal footprint — consumption plus investment — as shares of GDP and GNE.

The real net capital stock — the accumulated productive plant and equipment of the private business sector, expressed per worker and per head. Capital deepening is the tangible complement to innovation: more capital per worker raises output per hour. Olson predicted that sclerotic economies under-invest, because coalitions defend the returns on existing capital and block the new investment that would compete with it. The source series is already indexed to 2000 = 100, so no rebasing is applied. Comparable capital-stock data for the other countries in this project is not yet available, so this section presents a single country only.