From economic illiteracy, savings are born. Thank heaven for small mercies.
It seems increasingly clear the Coalition’s economic policy for the election is to continue its scare campaign on debt and deficits and hope Australians are economically illiterate enough to connect a possible interest rate rise by the RBA in two weeks with Labor’s economic policies. The Coalition’s economic team of Joe Hockey and Andrew Robb will be sweating on the next inflation rate figure due out next week.
To this end, Joe Hockey – hitherto invisible in the Coalition campaign – was this morning continuing to run the discredited line that the Government is “crowding out” investment through its borrowings, which is less nonsensical, but no less incorrect, than Barnaby Joyce’s claims that Australia was at risk of default.
Nevertheless, from such poor origins some decent policy might yet spring. The Coalition this morning announced a further round of budget savings, albeit rather paltry at $1.18b, in order to create the sense that their in belt-tightening mode, or perhaps just to try to distract the media from Workchoices. The announcement has brought the Coalition’s full total of savings to $23.8b, $9b of which relate to mining tax-elated expenditure, and much of which will be transferred to other Coalition programs rather than used as the “real savings” that Tony Abbott declared today.
Even with the new round of savings, the total is below the $24.7b in savings Andrew Robb announced after the Budget, as a consequence of reductions to mining tax-related expenditure, although this has been offset by savings related to the Government’s health reforms, which have already been reallocated to other health expenditure. But the Coalition appears to have given up on trying to claim it has $47b worth of savings, offering the final total of its savings package at $23,822.29m.
While avoiding genuine high-quality savings like slashing middle class welfare or the private health insurance rebate or chronic disease dental health scams, which waste billions of dollars every year, Andrew Robb has picked out some nice savings. The big ones are the abolition of the Government’s Carbon Capture and Storage Institute, an initiative of Kevin Rudd’s praised by Barack Obama to coordinate research into the unproven CCS technology, worth $300m, $100m each for two aspects of the NBN deal with Telstra, abandoned because the Coalition won’t proceed with the NBN, and $100m in savings from consolidating areas within the Department of Innovation.
Other savings, like $18m to dump the Government’s indulgent self-indulgent Human Rights Framework, or $40m from banning community cabinets or a lousy $300,ooo to cut COAG meetings and make premiers fly to Canberra, will garner media attention but are small change in the overall Budget. Julia Gillard quickly seized on the abandonment of community cabinets as evidence Tony Abbott didn’t want to hear the views of Australians; it’s a nice line, but like the savings package itself is unlikely to interest voters for any length of time.
The full list of new savings is:
Discontinue the Australian Human Rights Framework – $18.3 million
Enterprise Connect – Amalgamation with AusIndustry – $101.6 million
Discontinue Funding for Africa Law and Justice Frameworks – $12.9 million
Discontinue funding for the United Nations Security Council Candidacy – $5.7 million
Discontinue Funding for Community Cabinets – $40 million
Discontinue Funding for the Centre for International Finance and Regulation – $24.1 million
Discontinue Funding for the MySkills website – $4.1 million
Discontinue the Green Building Fund – $5 million
Discontinue the Retooling for Climate Change Initiative – $39.8 million
Discontinue Additional Funding for the State Infrastructure Fund – $400 million
Recover the full costs of industrial elections from the unions – $25.4 million
Abolish the post of the Petrol Commissioner – $4 million
Discontinue Funding for USO Co – $100 million
Discontinue Funds towards the Retraining and Redeployment of Telstra Staff – $100 million
Abolish Funding for the RET Counsellor to India – $2.2 million
Abolish the Global Carbon Capture and Storage Institute – $300 million
Reduce COAG meetings to two and to be held in Canberra - $0.3 million
64 Comments
Law and Justice? Africa doesn’t need that!
Retooling for Climate Change? Bah, climate change is a myth / it won’t be so bad / it will be beneficial / she’ll be right. Slash!
International Financial Regulation? Umm, dudes, I think recent events have demonstrated that we don’t need that. Out it goes!
This is easy!
And frightening.
Small Beer really.
It also shows what Climate Change Luddites the Coalitiion are really when you match their rhetoric with their actions. I mean, I could almost come at abolishing the Carbon Capture & Storage Institute. However, they’ll need to invest some serious money in their Biochar intiative because it is also higly problematic and unproven technologically.
I also would have thought a RET Consellor for India was a good idea if you want them to come on board post Copenhagen to tackle Climate Change. Jolly them along the road, so to speak with RET moves as a pre-cursor, hopefully, to something more serious.
Then there’s the ‘Retooling for Climate Change Initiative’…well, I guess if you don’t believe in Climate Change…
Disconitinuing funding for the ‘My Skills’ website is just plain petty and vindictive pulling the rug out from people wanting a Skills portal.
Abolishing the harmonisation of Enterprise Connect with AusIndustry is short-sighted.
Pretty much like the Coalition itself.
Sqme old same old. When Howard became prime minister his aim seemed to be to dismantle every single program Labor had initiated. It looks like Howard’s lovechild is planning to do the same. It doesn’t seem to matter how worthwhile something may be, if Labor did it then it has to go. Hang the expense involved in axing things that are already operating successfully, or ready to go, and have had huge amounts spent on their set-up. It’s pure vindictiveness, nothing less.
Abbott doesn’t get it. He needs to come up with a few ideas that are not rehashed Howard-era policies. So far that just hasn’t happened.
Really, Bernard?
So would you say that (a) the RBA is not considering the housing price bubble in its deliberations, or (b) Labor policies have nothing to do with the housing bubble, or (c) there is no housing bubble?
The “paltry” list of savings is just for starters. A small sample to show how rapidly wasteful spending grew under the Rudd-Swan-Gillard government, even in the depth of a global financial crisis. Plenty more where those came from. Unless of course you think an Opposition should be able to identify tens of billions in small savings without the help of the public service to analyse the effects of cutting them?
And are the Coalition really trying “to distract the media from Workchoices,” or are the media folks using Workchoices – and the possibility that one or two of the thousands of provisions it contained might yet be useful for something – to distract from the Coalition?
I agree with Bernard about the need “genuine high-quality savings like slashing middle class welfare”.
It’s the most adult comment I’ve ever see him make.
Gee he may actually be the libertarian he has claimed himself to be and quite unlike the perennial progressive left apologist for the krudd.
Universal single payer health care should indeed go.
It isn’t good for health and it rots the human spirit.
I converts 99.9% of Australian adults (now that would include quite a few middle class) to perennial children who grow ever less self-reliant and independent.
The people especially the middle calss then come to rely on the government teat for health-care….. (and this is what leftists really love) ….pretty well everything else.
Bravo Bernard!
@JamesK
Tonight before bed I will get down on my knees and Thank God for that other 99.9% of Australians that don’t think the way you do.
While I have little faith in the quality of public spending (having seen the decisionmaking process up close) I find the Coalition’s saves to be a bit of a joke:
* The NBN saves are part of a crazy policy of tearing up a worthwhile achievement of the Rudd Government (bludgeoning and bribing Telstra into cooperation on broadband). The Coalition tried hard to get this when in office, and failed (as Rudd nearly did). Why start over?
* The RSPT/MRRT saves are almost equally silly – the big miners are close enough to being happy with the cut-back version of the tax, and the Coalition is setting itself against tax cuts for business, small business, and everyone else. Plus these ’saves’ don’t shift the budget bottom line, since they’re matched by the revenue loss from not proceeding with the MRRT.
* Climate credibility, already in famine-level supply in the Coalition, drops to the point where poor Greg Hunt may have to start eating his old uni essays just to stay alive. As best as I can see, they’re cutting just about all funding for international climate aid and mitigation programs (not doing much to build international agreement!). Hacking away at ‘clean coal’ funding may appeal to Bernard, but it’s a deeply weird step for the Coalition; it’s a further snub to international climate cooperation (the Global CCS Institute has a lot of foreign governments and companies as members), and pisses off a lot of industry people that the Coalition presumably wants to keep onside.
PS contra C@tmomma, I think the RET Counsellor position is actually a Resources, Energy and Tourism position, not Renewable Energy Target related. Interestingly, India is in the midst of introducing a market based ‘white certificate’ energy efficiency scheme similar to what already operates in many countries (and three Australian states) and which is likely to be proposed in-principle by Gillard soon. The Indian “Perform, Achieve and Trade” scheme will cover a big chunk of heavy industry.
if I were not athiest, I would be part of the 99.9% thanking whomever that we do not spend 16% (and growing) of our GDP enriching the leeches at HMO and big pharma that bleed the life out of any government stupid enough not to use regulation to protect citizens from their outrageous greed.
health care is too important to leave to the unregulated free market. Not that it stays free for very long when left unregulated, as demonstrated by the US financial “services” industry recently.
Always rely on a blinkered leftist to miss the dishonesty my post pointed to.
Hair-trigger repsonses along the lines of Labor/Green good vs conservative/libertarian bad are just so mind-numbing if predictable.
When a room full of economists unanimously agree that interest rates are not being driven by the government, it beggars belief that Abbott and Co. will try to beat up this issue for a few votes.(The Reserve Bank governor politely declined to comment! How amusing.)
Oh well, at least it shows some consistency with the way Abbott uses refugees for the same purpose.
Yes lindsayb, besides healthcare what else “is too important to leave to the unregulated free market”?
I say we chip in and buy stocky Hockey and Andrew Robb seats at a Joseph Stiglitz lecture. He may learn that it is only the LNP that have forgotten the GFC happened (& is still happening….
Apparently Christopher’s room full of economists doesn’t include many conserbative non Keynesian advocating ones:
“Australia is a small, open economy with a flexible exchange rate. There is consequently a real possibility that any increase in demand caused by fiscal easing will merely raise interest rates, induce capital inflow from abroad, appreciate the currency and reduce net exports”
http://www.theaustralian.com.au/news/stimulus-may-not-work/story-e6frg7b6-1111118793315
or
http://www.ft.com/cms/s/0/e7909286-726b-11df-9f82-00144feabdc0.html
And, where, may one ask, is this unregulated free market? There’s the illicit drug trade – is that what you mean?
Funny that the Libs suddenly see cost of living as an issue. Afterall, they introduced the GST, a 10% tax on everything. And interest rates increased 10 times in the last year of the Howard Government. They might blame the Reserve Bank for that, but if the Federal Governemnt is not to blame for Interest rates, it can hardly be to blame for electricity and petrol prices either, which are charged by private companies or state governments.
Hi all
Have just gone through Andrew Robbs spreadsheet available at
http://www.liberal.org.au/Latest-News/2010/07/20/~/media/Files/Policies%20and%20Media/100720%20Additional%20Savings%20Table.ashx
Anyhow it has total savings of 23822 million over 4 years.
They flagged 9041 million in savings against a forecast MRRT revenue of 10,500 million. In other words they need to find another 1459 million in savings to simply offset the removal of this revenue stream.
Totals for 4 year forecast: Gross Savings of 23822.29. Items flagged as getting replacements of -3164.05. Less MRRT Revenue reduction of -10500. For a real saving of 10158.21, so less than half!
For each year:
2010/2011: Gross Savings of 2269.749. Items flagged as getting replacements of -596.524. For a real saving of 1673.225
2011/2012: Gross Savings of 4639.606. Items flagged as getting replacements of -1055.563. For a real saving of 3584.043
2012/2013: Gross Savings of 6820.894. Items flagged as getting replacements of -1025.663. Less MRRT Revenue reduction of -4000. For a real saving of 1795.231
2013/2014: Gross Savings of 10092.041. Items flagged as getting replacements of -486.3. Less MRRT Revenue reduction of -6500. For a real saving of 3105.741
Beachcomber: GST reduced the cost of living relative to wages, even if it didn’t look that way when face-value prices jumped by 10 per cent. Because it’s such an efficient tax, GST allowed wages to go up and income tax to go down, and the damaging wholesale sales tax to be abolished altogether. No tax is good, but GST is one of the least bad taxes ever invented. When Kevin Rudd specifically excluded the GST from the terms of the Henry Tax Review, that had nothing to do with keeping the cost of living down; it had everything to do with looking that way – just cynical populism, nothing more. There’s a good Wikipedia article on GST (VAT) here
Yes JamesK, I’ve never mentioned my aversion to middle-class welfare previously in the two and a bit years I’ve been writing for Crikey.
Wow. Hockey really said ‘the Government is “crowding out” investment through its borrowings’? Wow, just mind boggling dishonest. Its the same lie that Costello made about government borrowing money causes higher interest rates because it decreases the supply of credit. The USA has managed to find creditors to lend 13 trillion dollars. But the federal ALP’s $57 billion is going to break the bank!
Yes Bernard. I’ve read you for three years and more.
With respect to this and the management of the Murray-Daring, I’ve largely agreed with you.
But what you want here, I suspect, is the means to the end of a single payer health system ala UK (or perhaps even worse Canada?) not actually truthfully for the principle or rejecting middle class welfare in and of itself.
If you truthfully opposed middle class welfare on libertarian grounds you would oppose Medicare.
You can’t have it both ways.
No JamesK, throttling back middle class welfare would entail axing Howard’s ‘gift’ of a 30% tax rebate on private insurance, which he used to bribe the electorate.
In the US, the majority in most of the polls I read wanted a single payer system, but hey, that’s ’socialism’, and for a country which sees families bankrupted every day by medical costs it’s a no brainer.
Sure you can have it both ways. All you need is an economic equivalent of Laplace’s Demon from theoretical physics. That clever little fictitious beastie which opens the gate for particles of gas A and closes it for particles of gas B, thus separating the gases and overcoming the second law of thermodynamics.
This little demon could be enlisted to open the taxpayer’s wallet for any working class person, but quickly snap it shut whenever a middle class person approaches to make use of the same public benefit, without changing anyone’s decision to get private insurance or not, and thus overcoming the fundamental law of economics, that people respond to incentives.
(The evil middle class person reasoning perhaps, in the selfish way of his class, that he has already paid a bigger share of it from his taxes and stupidly doesn’t understand why he can’t at least get back a partial tax rebate towards his self-funded alternative).
Sorry that should be Maxwell’s Demon. Laplace’s Demon was the other little beastie, the one that knew everything, and which became incarnate in the person of Kevin Rudd.
@Christopher Dunne.
If you go in to your local private hospital tomorrow and have a total hip replacement well over two thirds of the true financial cost of that service provision including the prosthesis and drugs will be paid for by Medicare and the PBS.
Only a marked minority is paid by your private health insurance.
If your PHI paid the true cost your insurance bill would be well over $180/week not $80/month.
That’s not only middle class welfare on a scale that makes the PHI tax rebate puny in comparison but it is also the case even if the patient were a billionaire.
Health care in Oz is finely balanced and the unpleasant Nicola Roxon and Bernard Keane are playing politics: in essence being pseudo fiscally-responsible and pseudo libertarian when the truth is they are both left-wing progressives and want even the pseudo-private system we have here diminished to invisibility.
That’s okay if you say it up front and argue it……… but then they’d lose.
So dissembling is the order of the day.
If there were suddenly a true private system side by side with the public health care delivery in Oz, hospital care would abruptly grind to a halt.
There would be chaos. A moderate sized public hospital capital cost is $1 billion!
As a quirk of an unspoken agreement in Aussie politics the truth is not told and the conservative side of politics actually apparently and ironically support government intervention to maintain PHI rates of about 40% of the population.
So do Labor except when they want to play partisan politics and score disingenuous pseudo-points election time.
When the national PHI rate goes sub 36-38% it would be like NSW hospital service delivery for the rest of the country.
And by-the-by, the overwhelming majority of Americans do not want a single payer system.
Obama does and he couldn’t make it happen.
He just created what he hopes is a stepping stone.
Labor is talking about what it will do in terms of positive changes.
The LIbs are merely talking about what they intend to undo.
I have a sneaking suspicion they think that ‘undoing’ will be popular because of the 2007 WorkChoices campaign. They feel the electorate will get on board to trash things they feel are unpopular.
However, the things they are trying to undo are not unpopular.
Greenies want carbon capture to work. Most people might not understand it but they don’t dislike the concept.
Communities have embraced the community cabinet idea. The Libs are underestimating the fact that the average voter likes the idea of being able to have a direct say, give a direct opinion.
Communities see the sense in trades training, GP superclinics and similar infrastructure.
And the electorate has seen positive changes coming out of COAG. Despite all the flak thrown at Rudd, that idea of consultation generally warms people’s hearts. The idea that consensus with state govts might be found via regular COAG has been applauded by most people I’ve spoken to (and I don’t think it is unreasonable for theat feeling to be reasonably generalised).
So what the Libs want to undo is NOT things that people find offensive, or objectionable — therefore the Libs tactic of undoing what they consider is wasteful, are things the general community would not see that way.
With exception of your accommodation, which is wholly paid by your health fund (apart from a small up front fee).
JamesK, you are welcome to your own opinions (such as they are), but NOT your own facts. From Wikipedia:
Between 2003 to 2009, 17 opinion polls showed a simple majority of the public, i.e. nearly 50-60%, supports a single-payer system in the United States.[43] These polls are from sources such as CNN,[44] AP-Yahoo,[45][46] Quinnipiac,[47] New York Times/CBS News Poll,[48][49][50] Washington Post/ABC News Poll, [51] Kaiser Family Foundation[52] and the Civil Society Institute. [53]
…anyone even vaguely acquainted with US politics knows this, and Obama’s administration was loudly castigated by the public for not delivering what was in fact a majority position, but not a politically achievable one.
So go on, rant on, you’re mildly amusing.
While canning the GCCSI might be a good idea, the argument presented here for abolishing it doesn’t hold water BK. It’s a research institute; of course it’s unproven. We tend not to research proven technology. Also, actual technologies aside, I’m firmly of the view that the role for Government in technology is only at the early stage research/early demonstration phases.
For more detail on this view, check out the Wilkin’s review, chapter 6
http://www.finance.gov.au/publications/strategic-reviews/docs/Chapter-Six.pdf
I also think the Indian Counsellor is a great idea; their climatic conditions are pretty similar to ours and the village structure is driving innovations, particularly in small scale biofuel projects, that will be widely applicable in remote area power supply situations in Australia. Having the linkages in place to make the most of this is worth a lot to both of us. Much more than a couple of million bucks a year, which is peanuts.
Christopher Dunne, you’re cherry-picking. A survey of the major polls, including the ones you mentioned and showing time trends, is at pollster.com. Their meta-analysis of polls shows 46.8% opposed to Obama’s plan and 40.1% in favour.
Even Democrat polling legends Patrick Caddell and Douglas Schoen are now warning that the battle for public opinion has been lost:
JENAUTHOR:
Yes, because some of us believe Australia is over-governed, over-taxed, over-regulated, over-reliant on a central nanny state to fix every problem. That’s who the Libs are catering to.
Every time the “average voter” gets a direct say in the provision of some service, it’s my wallet the government is opening to pay for it, while at the same time reducing my choice of where I get that service.
Only the anti-federalism camp have seen anything positive coming out of COAG. Those extra meetings are not for the purpose of supporting state government. Those extra meetings are to bring premiers to their knees, begging for special-purpose Commonwealth grants, Commonwealth pork barrels, and to go along with Commonwealth hegemony.
Labor has had a long-running program to reduce the state governments to dysfunctional, welfare-dependant branch offices. NSW is its biggest success story so far.
@ powerisnotstrength
It’s not just that Obamacare is not single payer legislation but that his “preferred” single payer system was the first proposal to get knocked on the head. That was when the Dems had a 79 seat majority in the House of Reps and a filibuster-proof majority in the Senate.
Not only do a large majority of Americans disapprove of Obamacare but an overwhelming majority disapprove of single-payer.
Wikipedia is progressive liberal biased website and widely criticised as such. Christopher’s reference is nothing short of utterly pathetic denial in the face of overwhelming evidence.
Massachusetts voted a Republican Senator to replace Kennedy as a result of the Dems widely perceived assault on democracy and they will be slaughtered in November because of it.
As usual Christopher Dunne is talking utter rubbish.
Both he and jenauthor are mere partisan blinkered hacks and honest debate with them is simply never possible.
Even when pwned, they resort to defensive wounded cur yelping.
Just read their last couple of nonsense posts (admittedly among thousands of such claptrap).
Easy does it, JamesK. Even if they are as unreasonable as you say, there are other readers with open minds.
Yes maybe.
But I’ve been battling this inane intansigence for longer.
Overly pessimistic perhaps.
The idea of either party slashing spending during a global recession is ridiculous economic irresponsibility. Abbott’s comments this morning about businesses and households tightening their belts “so governments should cut too” is crazy; when business and households “tighten their belts”, that is sack workers and cut spending, government automatic stabilisers create a deficit by design to ensure that the economy doesn’t go over a cliff due to lack of demand. Every treasury analysis or projection shows that australia would be deep in a recession if it wasn’t for the various economic stimulus packages out there and that our current economic growth is still largely driven by government spending; business and households may have picked themselves up off the floor, but they’re not back in the ring yet.
The idea that during a recession, government borrowing somehow crowds out private borrowing and forces up interest rates is similarly stupid; private investors don’t borrow during recessions like this one, they save and endeavour to pay down debt (and thus create deflationary risks). How do they save? They put their money in low-interest savings accounts. Where do the banks loan out the money to pay the interest on those savings accounts, given that there is no private borrowing? from investing in government bonds! Private sector saving and government spending are two sides of the same coin.
JamesH, aren’t you forgetting something? The purpose of government belt-tightening is to avoid increases in taxation which force even more private belt-tightening. Job vacancy figures show that business is trying to expand, and they can’t do it without borrowing. Private spending also avoids the deadweight losses (inefficiency) of government spending, of which the BER debacle has been a depressingly predictable example.
Bank savings accounts are not “saving” in the Keynesian sense of reducing “aggregate demand”, for the very reasons you correctly explained. Keynesian “saving” means taking money out of the production-consumption cycle which drives employment. In the 21st century, Keynesian “saving” means things like gold bullion or buying into a second-hand housing bubble fed by government incentives, which employs nobody – it’s just a form of intergenerational transfer payment.
What you say about savings deposits being on-lent is true (although too much of it is lent into the housing bubble, not to business). Which is why Henry wanted to discount the taxation on deposit interest earnings, a recommendation which Labor all but ignored, leaving all of us still over-dependant on risky overseas wholesale borrowing.
p.i.n.s., I don’t believe either side of politics has been claiming that the deficit will require increases in taxation; the case Abbott was making was that government deficits would drive up private interest rates, which is wrong. In any case, with our low public debt to gdp ratio, the existing tax base is more than adequate to pay off any debt incurred now with the natural increase in tax intake during the consequent upturn (which is where Howard and Costello got their surplus from). During any economic downturn the deficit naturally increases because the tax intake is lower (people earn less and business makes smaller profits) and social outlays are higher (unemployment and other welfare benefits, higher levels of crime, etc). The correct thing for governments to do is to spend more (whether from borrowing or expanding the money base, doesn’t matter) to ensure that a downturn does not become a slump, especially to ensure that the short-term unemployed are not permanently alienated from the job market and become long term unemployed. When the economy upturns, the natural increase in the tax base and decrease in social outlays will pay off any debt incurred.
Leaving aside debate about whether the BER program was a “debacle” or not, both private and government spending have strengths and weaknesses. Private spending is almost by definition procyclical, will underinvest in public goods and can generate inefficiencies through incrementalism and lack of coordination; eg the telstra/optus double mobile coverage situation.
Bank savings accounts are “savings” in the Keynesian sense if banks can’t or won’t lend them out. Australian households and businesses are deleveraging at the moment (http://www.debtdeflation.com/blogs/2010/06/27/there-is-no-gfc/) though not as aggressively as their US counterparts. The only net borrower on the local block is government.
No disagreement that propping up the housing bubble was bad policy. A decent land-tax regimen (which Henry also called for) would prevent such bubbles in the first place, but once they’ve started to expand, it’s political suicide for either party to try to prick them as they piss off everyone who already has a mortgage by doing so.
To avoid the political suicide of pricking the housing bubble is one thing; to favour it so much, during a global liquidity crisis, that collossal volumes of private investment are diverted away from the share, bond and cash markets – just when they needed it most, and against the warnings of the Reserve Bank Governor – is irresponsible pork barrelling of the highest order. And to call it “stimulus” when it was really the exact opposite – well, that’s just barefaced lying.
I don’t expect to get much enthusiasm for my next point, what with the current hysteria about Workchoices … But if you read Keynes’ General Theory, his entire “aggregate demand” problem and his refutation of Say’s Law (i.e. that demand always moves towards equilibrium with supply) is built on the axiom that nominal wage stickiness is so far removed from real wage purchasing power as to render labour unable to renegotiate real wages during a downturn:
- The General Theory of Employment, Interest, and Money, Chapter 2, section 2
But this axiom is wrong. What Keynes didn’t know was that 60 years later, genuine hard-core economists would take over the ACTU in a little country called Australia, and a couple of clever fellows called Bob Hawke and Bill Kelty would design a Prices and Incomes Accord which did exactly that. Perfect? Far from it; way too inflexible, caused a great deal of unemployment in the 80s, and nowhere near agile enough to respond rapidly in a sudden-shock recession.
But it introduced the unions to the concept of real vs nominal wage bargains, and the measurement of inflation became a lot more sophisticated over the following 25 years. If the current Labor government had understood the history and theory behind the Prices and Incomes Accord, they could have used its principles to adjust real wages without any need for demand stimulus at all. And if Howard had been able to finish the job of decentralizing the control of wages altogether, Keynes’ entire aggregate demand problem would simply dissipate like the smoke and mirrors that it is.
Perhaps JamesH ought read more broadly before he so laughably authoritatively informs us that “Abbott’s comments this morning about businesses and households tightening their belts “so governments should cut too” is crazy”
http://www.businessspectator.com.au/bs.nsf/Article/Have-the-Keynesians-learnt-nothing-pd20100720-7HV2R?OpenDocument&src=mp
http://www.ft.com/cms/s/0/e7909286-726b-11df-9f82-00144feabdc0.html
Everything is so simple for progressives ……….seemingly especially as they unwittingly display ignorance.
Even Glenn Stevens “said servicing the debt was an ongoing cost to the taxpayers of the nations concerned.”
http://www.news.com.au/business/breaking-news/higher-government-debt-unavoidable-rba-governor-glenn-stevens/story-e6frfkur-1225894593367#ixzz0uHvlOdgh
I think that that is an extremely conservative interpretation of Keynes. It is in a context where he is saying “even if you accept all these propositions of classical economics, reductions in money wages will not necessarily reduce real wages” – but he and his successors went on to overthrow the propositions as well. The neoclassical/New Keynesian position that Keynes boils down to “wages and prices are sticky” is not one I subscribe to.
How do you square your advocacy of “decentralising the control of wages altogether” (by which I assume you mean abolishing unions, Awards, fair pay, equal opportunity, etc) with the demand for a highly centralised Prices/Income policy that enables workers to cut real wages in synchrony? (and why would they want to do that in the first place?)
In any case your premise is wrong on the empirical evidence. A major study by the World Bank (hardly socialist radicals) found that:
“Countries with highly coordinated collective bargaining tend to be associated with lower and less persistent unemployment, less earnings inequality and wage dispersion, and fewer and shorter strikes compared to countries with semicoordinated (for example, industry-level bargaining) or uncoordinated (for example, firm-level bargaining or individual contracting) collective bargaining.
In terms of productivity growth and real wage flexibility, countries with highly coordinated collective bargaining tend to perform slightly better than countries with semicoordinated collective bargaining but may not perform differently than countries with uncoordinated collective bargaining.” pdf book.
PS. Stiglitz praises Australian stimulus package.
To your first question: I see decentralization, and centralized adjustment of prices and incomes, as two totally different paths to real wage flexibility. I’m saying the current Labor government had a choice of two historical frameworks to choose from, but when the GFC hit they chose that moment to ditch both approaches and try to recreate the 1970s.
The decentralization option is more efficient, but there is something in the view of those two World Bank authors (I’m not sure if it’s WB policy) that some degree of equity does lead to sleeker demand curves, happier local communities, less poverty and poverty-related costs, higher education levels, and better quality of life all round. Healthy unions, progressive taxation, and a welfare safety net of last resort are crucial for achieving this.
Healthy unions are vitally important in a liberal society. Decentralization does not mean abolishing unions, and to do so would be a violation of every principle of freedom and decentralization that I stand for.
Decentralization of industrial relations means separating both business and unions from government, and abolishing laws which enshrine absolute monopolies over labour, just like any other resource. Legislated union monopolies do the same to labour as a legislated monopoly of the Commonwealth Bank would do to banking. Howard went too far in limiting unions’ right to strike. He should have simply made it a crime to stop anyone else by force – either union member or “scab” – from working, and left it at that. Unions must be allowed to form, to negotiate, and to strike. But regardless, the individual must have the right to come to work or not come to work as he or she chooses.
I take your point about later refinements of Keynes, though I’m far from convinced.
I somewhat buried my second-last post with my last one, but would you agree that Labor exacerbated the saving problem by deliberately driving up the housing bubble at the expense of productive investment, cynically disguising a pork barrel as stimulus?
Joseph Stiglitz would say that. Like so many neo-Marxists, he disguises his anti-industrial dogma as some kind of breathtaking New Deal or Third Way.
Cherry picking polls? That’s a laugh!
When powerisnotaboutansweringthequestion goes on to talk about the polls on the Obama health reform bill, but NOT the polls about universal coverage!
Simple minds get easily confused, and powerless and jamesk are of the same ilk.
Poor dears,they’re only just mildly amusing.
By the way jamesk, you misunderstand the difference between a poll taken by reputable pollsters and your simpleminded idea of Wikipedia’s reporting of it. HINT: Your opinion is worth jackshit.
And further, there’s a big difference between what the public want and what politicians will risk enacting, hence the universal coverage got knocked out because Democrats in Republican areas were terrified of the backlash from the likes of the Tea Party (”Everything Obama is Communism/Fascism/Socialism”…take ya pick).
I’ve seen some silly stuff in my time, but really, how old are you?
Dismissing Stiglitz (Economics Nobel Laureate, John Bates Clarke medal, World Bank chief economist, etcetera, etcetara) as an “anti-industrial neo-marxist dogmatist” is a severe stretch of terminology. If he can do all that AND be an anti-industrial neo-marxist, then there is more to anti-industrial neo-marxism than you think.
I don’t know enough about how housing relates to savings to comment on that relationship, but I guess I would see the FHG in sort of Austrian terms; it was a bad signal that led to misallocation of resources. I do think that some stimulus to the housing industry was necessary. I suppose I would have advocated an expansion of the public housing building program instead.
That bastion of socialism, the Harvard School of Public Health, in June 2009:
The majority (55%) of Americans support a national health insurance plan financed by tax dollars. The level of support is nearly the same as it was in 1993 (59%);
…oh well, another bunch of stupid lefties I suppose! LOL
(web address: rwjf.org/healthpolicy/product.jsp?id=46908)
In fact, just google “US polls universal health insurance” and it’s page after page of the above.
Silly nongs here trying to argue from their own made up premises, but some of us actually read more than their blatherings.
Oh that Stiglitz, he’s the guy who got laughed at when he said the US wars of this decade would end up costing US$3 Trillion (that’s with a “T” Barnaby!), but no one’s quite laughing about it anymore.
I’d side with Stiglitz over the arseclowns pushing their own claptrap here any day.
Christopher Dunne, reading your invective after a discussion with the intelligent, educated JamesH is a bit like having a long, interesting conversation interrupted by a loud drunk with whiskey breath and nowhere else to go.
There are so many variables and variation in healthcare reform polling that perhaps the only things we can safely conclude about reform, single-payer models, and Obama’s model, is that (a) Americans want changes in their healthcare but (b) not with Obama’s plan.
Reform any functioning healthcare system too suddenly and you risk catastrophic disruption of the sort that can kill lots of people. The best sort of reform in healthcare is one that builds incrementally on the systems in place, with rollback options if it goes wrong. Classic risk management in other words. For example in Australia, the private-insurance rebates could be expanded to slowly take over all health insurance over a period of say 20 years, with progressive taxpayer-funded healthcare vouchers for all citizens (i.e. bigger vouchers for poorer people), privacy restrictions to protect the chronically sick, and a public safety net for the destitute. In a similar way that all motor vehicle owners must have minimal third party liability insurance but can buy it wherever they please.
Jeez you’re funny powerofstupidargument!
First you accuse me of ‘cherry picking’ when in fact you completely confuse polls about the Obama Health Bill and the near twenty years of a majority wanting a universal health insurance system!
Gotta say, you’re a silly smug git, aren’t you?
Clowns like you pretend to know something, get it so utterly wrong, and then slag anyone who does know the facts.
So toddle along, keep amusing yourself that you have a clue, but don’t complain when the facts get presented to you.
As for that other nong, jamesk:
“Universal single payer health care should indeed go.
It isn’t good for health and it rots the human spirit.”
I’d like you to read the Gallup poll titled “In OECD Countries, Universal Healthcare Gets High Marks”(August 2009) and maybe then you’d realise you are a complete idiot.
What it finds is that in OECD countries with universal coverage, people are, on the whole, much happier with the health services they receive, and by about 13% over those who don’t.
So, rot my human spirit with that kind of consistent, worldwide, popularity.
And next time you post this rubbish about me:
“Both he and jenauthor are mere partisan blinkered hacks and honest debate with them is simply never possible.
Even when pwned, they resort to defensive wounded cur yelping.”
…go look in the mirror, and then go and get some facts, before opening your mouth.
Go on JamesK, say it: “I told you so …”
But we haven’t heard back from JENAUTHOR yet on the subject of federalism and reducing COAG meetings.
And I haven’t heard any facts from you powerlite! LOL
Tough, isn’t it, when ‘loud drunks’ catch you out making up sh!t, eh?
Devastatingly convincing stuff, sir. Let’s see, we have: “Simple minds,” “Poor dears,” “Your opinion is worth jackshit,” “how old are you?” “Silly nongs,” “blatherings,” “claptrap,” “powerofstupidargument,” “silly smug git,” “Clowns like you,” “toddle along, keep amusing yourself that you have a clue,” “nong,” “powerlite,” “making up sh!t”
Are you finished? Right then, do you have any comment on this article by Tyler Cowen claiming that expensive, privately funded American healthcare is the heartland of medical research, and that universally-funded healthcare regimes have been riding on its back for years?
And I’ll withdraw my name-calling of Joseph Stiglitz if you can give me something more analytical than calling Tyler Cowen a “nong”.
Got some facts then, eh?
OK, I’ve got it now…you completely ignore your gross error in claiming that Americans have not wanted a universal health insurance system by tossing up Tyler Cowan’s thesis that because more Americans win Nobel Prizes for Medicine it doesn’t matter that 40 million of them don’t have health insurance!
Wow!@! Some segue!
More of the usual bullsh!t of pseudo-intellectuals who’ve got an internet connection but a shortage of neuronal connections.
Tyler Cowen is NOT saying that Americans don’t want a universal health insurance system…he is in fact trying to make an argument that it’s not desirable. So just maybe, that would imply that quite a lot of Americans are in fact wanting one? Hmm…but of course you’ve already claimed they don’t! (OK, you made that sh!t up…but that’s your style).
In a nutshell, Cowen’s argument is that US medical research (a product of private health insurance? No, but that’s another argument) produces a greater share of medical breakthroughs and that people in Europe (and Canada and Australia and the UK etc) benefit from it. Meanwhile, Americans die younger( read: the poor ones), but hey, what the heck, they ‘could’ get better care if they had the bucks! And yep, they’d be really happy to know they’ve ‘given’ us much better technology while they die of simple conditions!
And all this is predicated on the last 12 years of Nobel Prizes! Wow!
What if the marked decline in US education levels is extrapolated into the next few decades? What if the massive financial advantage of holding the word’s reserve currency is eroded by profligacy and wars and continuing fraud on Wall Street? See how much ‘medical research’ the US does then.
Tell the 40 million Yanks who can’t get a common drug or a simple procedure that it’s tough, but hey, your country has a few more Nobel Prizes! Tell all Americans it’s OK that you die younger than us, it’s all in a good cause! Yep, because some multi-national companies make a few more pennies per share! Yippee, you die, we win!
And 40 million will tell you that they want universal health coverage for their common complaints, not for platinum hip replacements and the latest genetic testing, but for stuff that kills them, but could be prevented but for access to a basic level of health service. Buy food or medicine? Watch your children die or applaud the latest Nobel Prize? Hard choice.
Change the subject to some abstruse speculation about health science (and where dollars get invested in search of profit at the expense of real people’s lives) if you will, but I’ll still call you a fraud who makes up sh!t about a subject you know zip about.
“Australia is one of the world’s leading Nobel Prize-winning countries, in proportion to its small population. Of the 11 Nobel Prizes awarded to Australians since 1915, six have been for ‘Physiology or Medicine’.”
…couldn’t resist! LOL
Yes that’s right, the Cowen article is a different angle from the earlier one about what voters want. I thought that was obvious enough not to have to spell it out.
You mention an interesting fact that “40 million of them (Americans) don’t have health insurance”. That seems like sufficient reason in itself for Americans to want healthcare reform; it doesn’t prove that that reform needs to be single-payer, even if a whole lot of voters have been convinced that it does. It would be a false dichotomy to say that the only two alternatives are (A) single-payer, or (B) more than 10 per cent of the population not able to afford healthcare. Here in Australia, both extremes could easily be avoided by the method I proposed above.
You’ve said nothing about Cowen’s argument about medical innovation apart from a lot of sarcasm to claim Nobel Prizes are a poor proxy for measuring it. Cowen doesn’t rely on Nobel Prizes for statistical evidence (Nobel Prizes are little more than anecdotes). Cowen goes on to provide a great deal of evidence about the abundance and quality of medical research and innovation in the US compared to Europe. Australia has a very fine culture of medical research, but it’s also very small and it struggles for funding.
Cowen also agrees that the US healthcare system is seriously flawed and in need of reform. But best the answer to serious problems is not always to throw out the baby with the bathwater.
But the stranger mystery here is … Where is the gratification in all these insults to an anonymous nickname that nobody can identify? From my point of view, it’s about as personal as receiving abuse by junk mail, addressed “To whom it may concern”. If I can figure out where’s the fun in that, I might be able to entertain myself next time I have trouble getting to sleep, by insulting Mickey Mouse.
Now I admit, there was a time when I used to occasionally entertain myself by insulting people in front of their friends, watching their faces go red and their friends laugh at them. What can I say, a misspent youth. And some insults are funny in their own right even without any feedback. For example I got a chuckle out of visualising you as a loud drunk with nowhere else to go. And as you go on in this way, I start to get more of a mental picture, including a sort of permanent sneer and a way of leaning in a bit too close. It’s not a very flattering picture.
But the really funny thing is that you’ve written all this bile under your own name. So the next time someone hears your name and the way you speak, and starts laughing, it just might be someone who’s recognised your name and your tone from reading this blog thread. Maybe me, maybe another reader, but you won’t have any idea who it is, or what they find so funny.
Cowen’s argument is as near to circular as your contortions in trying to avoid admitting you know jacksh!t about this subject.
America has the world’s largest economy, hence the most prestigious (and wealthy) universities, so a lot of the world’s medical research gets done there.
Wow! Who’d've thunk it?
What a majority of Americans want is what we have, ie universal coverage, single payer, and have done for over 20 years. What Obama managed to get past the congress was nothing like this, and hence it dissatisfied both the left and of course the rightwing retards who kept saying “we have the best health care system in the world” (but beyond the reach of 40 million, and out of reach of many of the insured due to the corrupt practices of the insurance companies…I could go on about this, but I’ll refrain, you get the drift).
Cowen’s thesis is an attempt to say that single payer systems don’t produce the quality of medical research that America does, but it proves no such thing. It’s an opinion about health care models in search of a justification, but it’s a very long bow.
Still, we’ve proven one thing: you make up sh!t and then try and wriggle out of admitting it.
bye for now
Much has been made by the Federal Coalition on the “relationship” between the Government Financial position and interest rates, specifically home lenders interest rates. The table and chart below detail the statistics from the Australian Bureau of Statistics.
Table 1
Federal Government Financial position and home loan interest rates
Year GFS Net Lending(+)/Borrowing(-)
$ millions Home loan rates
1999-2000 11,845 7.80
2000-01 6,279 6.80
2001-02 -3,409 6.55
2002-03 6,432 6.55
2003-04 6,834 7.05
2004-05 11,774 7.30
2005-06 16,681 7.55
2006-07 16,681 8.05
2007-08 21,331 9.45
2008-09 -29,323 7.00
The table shows interest rates falling from 1999-2000 to 2001-02 as the Government changed from being a lender to a borrower. As the Government financial position changed to becoming a lender from 2002-03 home loan interest rates increased to 9.44% in 2007-08. Interest rates fell when the Government became a borrower again in 2008-09. These figures indicate that as the Government financial position strengthens, interest rates rise. It begs the question as to what the relationship between the two measures are but it does not support the view that as the Government financial position tends towards borrowing that home loan interest increase.
The data was sourced from the Australian Bureau of Statistics publications;
1. Economic Indicators June 2009 (interest rates)
2. Government Financial Statistics 2008-09 (GFS)
Excuse the formatting I hope you can read it I can send as a pdf to anyone interested if you email me.
JAMESK: I’ve never thought BernardK was a lock-step Labor voter. In fact many has been the time when I find his comments to be a smidgen too right-wing.
Anyway, I think his list is excellent. It would be even better if he thought of a way to stop loading Canberra with Civil Servants. A sort of Civil Servant, environmentally friendly spray, which prevents them from multiplying as rapidly as they do at present.
Sorry Bernard, I am mindful of your previous occupation.
@Venise
I used to think the same way Venise (well….sorta).
However Bernard’s just the same as Redkez and Tony Jones…… just paid a lot less.
They all criticise Labor from the left if they are criticising at all.
Bernard’s fiscal “smidgen too right-wing” is only sham. As in the this case only when it actually advances his ‘real’ underlying far left agenda.
Don’t lose faith in him; he is as looney left as you but far less entertaining…….
@JamesH
I see you respond at length but studiously avoid the particular critique advanced against your utterly silly Abbott “crazy” smear.
Needless to say I disagree along with many your Keynesian view but then that wasn’t the criticism was it?
You wouldn’t be a student of Alinsky would you?
Or do you write for Fairfax or work for ABC news and current affairs?
Both questions are obviously far from mutually exclusive.
@Christopher Dunne
Thankfully you’re a fool in denial rather than just a mere clod.
http://www.realclearpolitics.com/epolls/other/obama_and_democrats_health_care_plan-1130.html
@powerisnotstrength
I told you so.
Jeremy@capeability – Your sample interval is a high growth period bookended by international recession events. If you’re trying to claim fiscal deficits have no effect on interest rates, or even a beneficial effect, try telling that to RBA Governor Glen Stevens.
- Fifty years of monetary policy: what have we learned?, RBA anniversary conference paper, 9 Feb 2010 (emphasis added.)
Further to Venise’s post, Gerard Henderson seems to agree with her a well (but doubtlessly for all the wrong reasons).
Could this be the beginnings of yet another conservative love affair with a lefty?
I suspect Keane has an auburn beard if only he allowed his testosterone free rein………