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Don’t Minchin it

August 20th, 2005

The Australian’s Margin Call column has an amusing comment on the privatisation of Telstra. The policy is rather like Voluntary Student Unionism in that it’s been pushed for so long that no-one in the government can abandon it, even though it no longer has any obvious rationale.

The fact that selling Telstra will make the public worse off in fiscal terms has finally sunk in and I suspect that Nick Minchin and the Finance Department (once the leading agency pushing a sale) would be happy enough to drop the entire idea.

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  1. Andrew Reynolds
    September 15th, 2005 at 12:19 | #1

    No, James, not all opening up of the economy was neo-liberalism, capitalism, communism, socialism or any of the other -isms that fixate people. It was just the trend towards greater freedom after the protectionist policies and other economic lunacy during the depression and war. If you cannot see that then that is the true nonsense.
    The nadir of economic repression was during the depression, and then there was massive resource re-allocation into economically destructive industries during the war. Since then there has been a progressive liberating of markets. That is what lead to the growth identified – not any wise or progressive planning by governments.

  2. September 16th, 2005 at 23:49 | #2

    Andrew Reynolds, OK, I understand your point, now.

    What I thought was conclusive evidence that Keynesian economic practices may not have been so absolutely conclusive after all, because, you claim that any economic policy should have been able to achieve similar growth results in those years not long after the end of the Second World War.

    Nevertheless, if 5.2% was achieved through the 14 years prior to 1974, and if such growth figures have never been matched since, that would still suggest that our economies back then were not the basket cases that market fundamentalist mythology would have led us to believe that they were.

    In any case, I don’t accept GDP figures as a satisfactory measure of prosperity. Any measure of prosperity that fails to subtract the effect of natural disasters such as the Canberra bush fires of 2003, but adds the economic activity involved in repairing the destruction, is clearly inadequate.

    This suggests an explanation of the curious anomaly of how, in spite of our average incomes having supposedly doubled in the last 30 years (Saunders “Australia’s Welfare Habit”, p5), two incomes at the very least, rather than only one are necessary to pay a mortgage.

    Because of the use of the GDP, much of the appalling waste inefficiency of our economy is concealed.

    John Humphreys wrote : You claim that a finite planet proves that exponential growth is impossible. …. nobody is claiming that growth will increase exponentially. Second, it is knowledge and technology that drive growth—not resources.

    That neo-liberals think that a 0% growth rate would be OK at some point in the not too distant future is news to me, and, if true, would be most welcome.

    It is consumption of non-renewable energy at a rate of 100,000 times the rate it was created (according to Sonia Shah) which has driven growth. In less than 200 years we have burnt roughly half of all the fossil fuels that were created by at least tens of millions of years for natural and geological processes.

    This is astonishing act of stupidity, which is only one of many, may well cause a catastrophic collapse of of our whole civiisation.

    A few years ago on ABC televsion, perhaps in the late 1980′s or in the early 1990′s I witnessed, on a live audience forum program, similar to today’s SBS’s Insight, a confrontation between David Suziki and another free market extremist, Des Moore.

    Des Moore was arguing that exponential economic growth should be continued because the market would come up with solutions to all the looming environmental crises.

    David Suzuki asked Des Moore if he was so certain of his case that he was prepared to put at risk the only planet on which we had to live. Des Moore replied :

    Yes

    … to which David Suzuki reponded :

    Then, you, sir, are a fool!

    Unfortunately, since then, when this should have sent alarm bells ringing, our society, instead allowed Des Moore and people like him to guide our destiny, and we may be about to reap the terrible consequences.

    If we are to have any hope of surviving the next few decades, we must, as a matter of urgency, ditch the baggage of ‘small government’ neo-liberalism.

  3. econwit
    September 17th, 2005 at 01:20 | #3

    “Unfortunately, since then, when this should have sent alarm bells ringing, our society, instead allowed Des Moore and people like him to guide our destiny, and we may be about to reap the terrible consequences.”

    Unfortunately, since then, we have had a barrage of people crying “the sky is falling”.

  4. Andrew Reynolds
    September 17th, 2005 at 03:04 | #4

    James,
    Appeal to authority is, short of abuse, the weakest argument, so having Dr. Suzuki calling anyone a fool is a weak argument. I could also call Dr. Suzuki and environmentalist extremist – it has as much weight as what you are calling Des Moore.
    If there is any evidence that Dr. Suzuki is right in fields beyond his expertise (he is a geneticist, gaining his Ph.D through the study of fruit flies) I am yet to see it. Until there is that evidence, I do not think that causing more people to starve through reduced growth is an appropriate policy.
    On basket cases. First you say that because the economies added 5.2% compound GDP growth they were not basket cases. Then you say that we should not measure them that way. Make your mind up, please. Besides, I did not say that ‘any economic policy’ should have given growth – re-read my comment and do not create a straw man.
    My position on this at least has the benefit of clarity – a reasonable degree of freedom will bring growth up to the limits of that freedom. The increased freedom to trade after the depression and war brought increased trade, both within and without the country. This brought growth, reducing poverty, both in absolute and relative terms. To continue that growth, greater freedom is required. The contrast between North and South Korea could not be starker – the North started out much the richer of the two.
    On growth generally. We liberals do not claim growth will or will not increase in any direction. If you re-read what I said, I thought I had made it clear that growth is not the target, although it frequently (if not invariably) is the result. The target is freedom; the freedom for the individual to choose their own life and direction. It is a point the left frequently overlooks in their obsession with growth and anything other than freedom.
    Regarding the two income thing – please try to compare apples with apples. The new houses we were buying 30 years ago are not the same houses we are today. Back then a three bedroom one bathroom was the norm. Now a 4 by 2 is the minimum and there is far more that we stuff into them. If you were to build a 3 by 1 now with a black and white TV, no microwave, a single phone line, no broadband etc. you would find that one income is more than sufficient to pay for it.
    There are also more people chasing the old houses that were built 30 years ago because they are generally closer to the city. If you want cheaper houses then we need to release more land for development, build more roads, lower taxes, building industry de-regulation … hold on, I think you oppose all that.

  5. September 17th, 2005 at 07:20 | #5

    Andrew Reynolds wrote : Appeal to authority is, short of abuse, the weakest argument …

    The main authority I was appealing to was Des Moore himself, who clearly stood condemned by the words out of his own mouth.

    I can see that Moore’s views are not that far removed from your own.

  6. September 18th, 2005 at 10:17 | #6

    Andrew Reynolds wrote : On basket cases. First you say that because the economies added 5.2% compound GDP growth they were not basket cases. Then you say that we should not measure them that way. Make your mind up, please.

    As I wrote earlier, even in terms of neo-liberalism, government intervention in the markets appears to have outperformed neo-liberalism on the basis of the statistics I gave.

    I don’t say the GDP is completely meaningless. There is obviously a very rough correlation between an increase in the GDP and overall prosperity. However, it counts many forms of economic activity which have been necessary to make up for the many inefficiencies introduced into our society as the result of untrammeled ‘free market’ reforms as adding to our prosperity.

    Most families these days need at least two cars to get by instead of one, largely because public transport has been negelcted at the behest of market fundamentalists in recent decades, yet the cost of running an additonal car is not deducted from the income figures. This is only one of dozens of examples I could give.

    Given the extreme agenda that market fundamentalists want to impose on society, and often against the explicit wishes of the majority, I would sugget that the onus should be on them, rather than defenders of government intervention, to prove that teh alternative of sensible government intervention in th economy is unworkable. Clearly they have not done this.

    Let us remember what some of the latest components of economic ratiomalism include, apart from privatisation :

    1. removal of any effective protection of unfair dimissal laws fro most of the Australian workforce.

    2. removal of the rights of workers to have their incomes protected by governmetn legislation.

    3. forcing people on disability pensions to accept the lower benefits paid to able unemployed persons, together with all the petty harassment that uemployed people are required to endure.

    5. unlimited rights of companies ot offshore work to countries where labor costs are cheaper.

    4. etc, etc, etc.

    Of course, therThe GDP

    Andrew Reynolds wrote : I could also call Dr. Suzuki and environmentalist extremist

    Intelligent life is completely unique in our region of the universe. The conditions to sustain life are immensely fragile in the huge void of space. We can count ourselves extremely lucky that the conditions on this planet have remained suffinciently stable for the last several hundreds of millions of years to have allowed life to have evolved to the point that we have now reached.

    It is not David Suzuki, who is an environmental extremist, rather, anyone who thinks that we can tamper substantially with a biosphere that we barely understand without putting at risk the whole basis for the continuation of highly evolved life is an extreme anti-environmentalist to the point of being off the meter.

    We have, in less than two hundred years, dug up and burnt roughly half of the carbon which has been accumulated under the earth’s surface over tens, if not hundreds of milions, of years.

    All that carbon is now in our atmosphere. How can we begin to understand how this will affect conditions for life, let alone human civilisation, on this planet?

    One should not need to be a meterologist in order appreciate the extreme stupidity and recklessness of such an act.

  7. September 18th, 2005 at 11:08 | #7

    (Whoops! I pressed the ‘submit comment’ button, prematurely. My apologies for the greater than usual number of mistakes and spelling errors.)

    After :

    1. removal of any effective protection of unfair dismissal laws for most of the Australian workforce.

    2. removal of the rights of workers to have their incomes protected by government legislation.

    3. forcing people on disability pensions to accept the lower benefits paid to able unemployed persons, together with all the petty harassment that unemployed people are required to endure.

    5. unlimited rights of companies to offshore work to countries where labour costs are cheaper.

    4. etc, etc. etc.

    … above, I meant to add :

    Neo-liberals would have us believe that we have absolutely no alternative to these regressive mean-spirited polices because of the alleged past failure of the government intervention.

    You have not proven your case.

    Andre Reynolds wrote: Regarding the two income thing – please try to compare apples with apples. …
    There are also more people chasing the old houses that were built 30 years ago because they are generally closer to the city. If you want cheaper houses then we need to release more land for development, build more roads, lower taxes, building industry de-regulation … hold on, I think you oppose all that.

    It is interesting that you believe that we should compare apples with apples. I suggest you read the evidence of how neo-liberal economist working for two major banks blatantly fiddled with statistics to ‘prove’, in defiance of the every day experience of normal people, that housing remained affordable in recent years in an ABC Radio National Ockhams’s Razor talk, “Housing Affordability Measures Under The Microscope”. These economists were definitely comparing apples with oranges and all kinds of other exotic fruits in order to make their case.

    I think that many would be very happy to be able to afford the kind of house that existed in the 1960′s and 1970′s on quarter acre blocks, instead of the squashed, poorly built, energy intensive high rise units that are still beyond the means of many of today’s two income families. Perhaps they were in some ways more modest in comparison to some of today’s housing, but they were built properly and likely to last a lot longer than what is built today.

    You also allude to the problems caused by growing population, but wasn’t it neo-liberal economists have for years been warned that our economy would collapse if we didn’t raise our population levels to the order of 50 or so million?

    No, there aren’t any easy solutions to the mess that economic neo-liberalism has created in housing and in many other areas.

    I would suggest decentralisation of our economy and a sensible allocation of land in regional and rural centres to meet the unmet demand for housing.

    However, this time it must be properly planned by our governments. This responsibility can no longer be left in the hands of land speculators and property developers.

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