Home > Economic policy > Open letter to Doug McTaggart

Open letter to Doug McTaggart

November 12th, 2009

Update 12/12: This was initially posted here and emailed to QIC on the morning of 10 November. As yet, no response. And, apart from a snark by Andrew Fraser, no public response to my piece in last week’s Fin pointing out that the government’s case for privatisation was entirely spurious

Dear Doug,

As you may be aware, I have been very critical of the “Myths vs Facts” booklet which is, as far as I know, the only document released by the Queensland government to present its case for sales of public assets. In today’s ABC News, you are quoted as supporting the sales and saying

It can curtail its spending on its infrastructure program and let service quality deteriorate, it can raise taxes to pay for the interest bill that’s building up, or it can rearrange its balance sheet – sell those assets which don’t have a particular need to be in Government hands and own assets that should be,

This statement appears to endorse the government’s claims that investment in non-income generating assets can be financed by the sale of income-generating assets, with no need for additional revenue to service the associated debt. In my view, these claims are obviously fallacious, and I would appreciate clarification on a number of questions. I think these questions admit an unequivocal “Yes” or “No” answer, with supporting argument if desired.

1. Do you believe that the “Facts and Myths” booklet presents a fair statement of the arguments for and against privatisation, offering Queenslanders sufficient information on which to make an informed judgement?

2. Do you endorse the statement that ‘Keeping these businesses would cost the Government $12 billion over the next five years. That’s $12 billion spent on new coal trains and new wharves that can«t be spent on roads, schools or hospitals.?

3. Do you regard the statement that “The total return from all five businesses in 2008-09 was approximately $320 million … When the sale process is completed, it is anticipated the Government will save $1.8 billion every year in interest payments” as providing a fair basis for assessing the fiscal costs and benefits of privatisation?

With my regards,
John Quiggin

Note: A previous version was addressed to Bernie Fraser, but Doug McTaggart’s comments appear more directly relevant.

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  1. TerjeP (say tay-a)
    November 14th, 2009 at 19:53 | #1

    Would you prefer to see lower welfare spending? and lower government spending? and lower taxes?

    Yes, mostly yes and yes.

    Lower welfare spending because a huge amount of current welfare spending is just wasteful churn and secondly because obviously it is better if people and communities can manage to support themselves. And lower taxes because it is tough to hold out the hope that people and communities can manage to support themselves if you take away a large proportion of their money and insert a large wedge on domestic trade. Government spending I’m less fixed on. I do see a lot of current government spending as unjustified.

    However I don’t think answering your questions is going to fix your poor logic.

  2. hrvoje
    November 14th, 2009 at 20:55 | #2

    You’d think that in a country like Australia we would have more intellectuals asking hard questions, exposing and busting myths and semi-truths. Yet John mostly stands alone, while majority of the intellectual elite especially in academia stands on sidelines being busy being irrelevant and detached from issues in the real world.

  3. SJ
    November 14th, 2009 at 21:46 | #3

    Terje Says:

    …obviously it is better if people and communities can manage to support themselves. And lower taxes because it is tough to hold out the hope that people and communities can manage to support themselves if you take away a large proportion of their money…

    What’s a community, Terje? And why are you even talking about communities rather than individuals? How big can a community be before it starts to become some evil monster?

  4. TerjeP (say tay-a)
    November 14th, 2009 at 23:23 | #4

    SJ – No doubt you have some point to make. Never the less I’ll stick my neck out and answer your questions.

    Community is a pretty common term. It means a group of people joined by a common interest. Try here for a more detailed definition:-

    http://en.wikipedia.org/wiki/Community

    Why am I talking about communities? Perhaps you missed the earlier exchange of comments. I made the point that I thought a reduction in tax rates would increase total human welfare even if it lowered the welfare delivered by government. And obviously communities are a key non-government means by which our psychological and physical well being is enhanced. I could have referred to “civil society” instead but I find most people have a more implicit understanding of the term “community”.

    The term “community” generally carries positive connotations and most people would probably think of good examples before evil examples. But yes some communities can be evil. Size isn’t a defining attribute of communities that we might consider evil. A community is evil if doing evil stuff if part of what it exists for. For example Toastmasters International can be regarded as a community and it claims 250,000 members in 106 countries. The Ku Klux Klan on the other hand is confined primarily to one country and supposedly has around 5000-8000 members. In these two examples the larger community is clearly the lesser evil.

    In summary:-

    - Communities are groups of people brought together by a common interest.
    - Communities are key to human welfare.
    - Communities can be very large without being evil.

    Is there anything else I can help you to understand?

  5. Alice
    November 15th, 2009 at 09:40 | #5

    @TerjeP (say tay-a)
    As I suspected – you seek only a smaller government Terje and really dont care about the effects, progressive or otherwise of changes to the income tax rates, or changes to welfare as its required or changes to government spending as its needed. Its just allm about getting rid of government to you.

    Its your logic that is flawed Terje.

  6. Alice
    November 15th, 2009 at 10:04 | #6

    @TerjeP (say tay-a)
    Government is the expression of a common interest of the community Terje. In the same way “communities” creat markets, they also create governments….If community choices really matter to you, of course.

  7. Alice
    November 15th, 2009 at 10:09 | #7

    Anyway…where is Moshie???

    More important things have happened. This is likely to be the first time ever Moshie is going to hear me say “thumbs up Rees” if it means NSW Labor get rid of Tripodi and Obeid and any other smug right wing self interested power mongers that have been annoying us no end (after that – get rid of Roozendahl the “privatisation zombie” ) and ban developer donations.

  8. paul walter
    November 15th, 2009 at 12:52 | #8

    I never fail to be surprised at what powerful messages can come from a few innocuous words.
    “Andrew Fraser”.
    Sooner or later, one gets there!

  9. paul walter
    November 15th, 2009 at 12:59 | #9

    Alice, am observant of Terje’s (and Andrew’s) assiduous courtship of you thru this and other threads.
    Remember, even tho its flattering, even tho you’re tempted, remember your standards and resist, even above and beyond these potent blandishments, lest you surrender all to a moment’s weakness…

  10. November 15th, 2009 at 17:43 | #10

    paul,
    If you count pointing out manifest errors and illogical argument as “courtship” then I would suggest it is your command of the English language (or logical thought) that is suffering more than a moment’s weakness.
    I would suggest that it is more true of “ABOM / Karmaisking” and Alice than anyone else here.
    .
    Alice,
    We have already established that you are in favour of wasteful churn in tax revenues and spending – and that you regard salaries of over $70k as “out of control”. Any more you have in there to further establish your command of economics?

  11. Alice
    November 15th, 2009 at 20:34 | #11

    @Andrew Reynolds
    What??? You say

    “We have already established that you are in favour of wasteful churn in tax revenues and spending – and that you regard salaries of over $70k as “out of control”.

    Large call Andy. When, where how?? As usual I wont expect an explanation for this inane comment but if you decide its legitimate…post dates, times, comments …otherwise sh**…u*!!

  12. paul walter
    November 15th, 2009 at 20:36 | #12

    Alice, you could always point out to him the role of situational bads in the creation of artificial markets, the real purpose of free trade agreements ina world operated by superpowers and ask him why $thirty trillion is handed over to the casino Madoff types, while some sources have suggested that it would cost as little as $50-100 billion, to secure basic drinking water for the global poor (for example).

  13. Alice
    November 15th, 2009 at 20:41 | #13

    @Andrew Reynolds
    Abom and Kamaisking has wiped out your arguments countless times Andy….but you clutch on to the free markets libertarian dreams notwithstanding, like a drowning man to a liferaft which has a logo on the side (“praise be to all banks”).

    You may as well take or be on opium (in an opium dream?) for all the sense you draw from others arguments (like me and ABOM) Andy.

    Do you possibly think you dont drive us both crazy….and others?

  14. Alice
    November 15th, 2009 at 20:41 | #14

    @Andrew Reynolds
    Abom and Kamaisking has wiped out your arguments countless times Andy….but you clutch on to the free markets libertarian dreams notwithstanding, like a drowning man to a liferaft which has a logo on the side (“praise be to all banks”).

    You may as well take or be on opium (in an opium dream?) for all the sense you draw from others arguments (like me and ABOM) Andy.

    Do you possibly think you dont drive us both crazy….and others?

  15. Alice
    November 15th, 2009 at 20:42 | #15

    @paul walter
    If I knew it I would have Paul Walter.

  16. SJ
    November 15th, 2009 at 20:54 | #16

    Terje, Alice readily grasped the point I was making, viz:

    Government is the expression of a common interest of the community Terje. In the same way “communities” creat markets, they also create governments….If community choices really matter to you, of course.

  17. TerjeP (say tay-a)
    November 16th, 2009 at 05:49 | #17

    Government is the expression of a common interest of the community Terje.

    I refute the notition that government is “the” expression of the community. However I fully accept that a democratically elected government is “a” expression. However so is a riot or a lynching.

    One defining traight of the government as an embodiment of collective interests is that it deals in coercion to get it’s way. As such it is on much weaker moral ground than the surf life saving societies or volunteer bushfire brigades.

    Political parties bundle up a whole stack of positions and sell it as a bundle. Politics and government is a blunt instrument which most people feel disengaged from (the antithesis of community).

    The government is not the community. Even if it is a democratic government that momentary tests the mood of the community every couple of years.

  18. Alice
    November 16th, 2009 at 07:19 | #18

    @SJ
    As you can see SJ – the point isnt enough for Terje. Apparently, to Terje, communities dont form governments as an expression of their will …but communities do apparently express their will in riots, lynch mobs and market creation (is this OK to libertarians – yet government is not)??

    Terje – the more you argue, the deeper you sink. Its a blind ideological anti government fixation that libertarians have whatever way you look at it. They dont want to restore or improve anything about government, they dont accept that governments are an expression of the will of the people even though they are, they seek to influence others to believe anti government propaganda and they seek to remove any government influence even though the community clearly wants and participates in the organisation of government?

    This is not libertarian Terje. This is dictatorial.

  19. Alice
    November 16th, 2009 at 07:23 | #19

    @paul walter
    Paul – they will never get me no matter how hard they try! I only see nightmares and chaos in their crazy utopic dreams for a new society without government.

  20. SJ
    November 16th, 2009 at 18:48 | #20

    I see what you’re getting at, Terje, but the surf lifesaving club has rules. If you don’t like them, you’re free to leave (assuming that they haven’t already kicked you out), but they still don’t give you the option of staying in the club and not following the rules.

  21. Alice
    November 16th, 2009 at 21:30 | #21

    @SJ
    SJ – I notice you were very careful not to use the word “regulations”.

  22. Alice
    November 16th, 2009 at 21:35 | #22

    Any sign of a response from Mr McT?? Thats not really in the spirit of a good debate is it? Still, he might be working on it.

  23. Joseph Clark
    November 16th, 2009 at 22:21 | #23

    Doug McTaggart isn’t bound to reply to random challenges from local blogs. If he was they would have to pay him a lot more than they currently do.

  24. TerjeP (say tay-a)
    November 17th, 2009 at 01:27 | #24

    they dont accept that governments are an expression of the will of the people even though they are

    A bit rich given that I said:-

    I refute the notition that government is “the” expression of the community. However I fully accept that a democratically elected government is “a” expression.

  25. Alice
    November 17th, 2009 at 05:28 | #25

    @TerjeP (say tay-a)
    whats “a” expression versus “the” expression” or “an” expression Terje?

  26. Alice
    November 17th, 2009 at 05:31 | #26

    @Joseph Clark
    Joseph – you dont know what you are saying (lord have mercy on your soul lol). This isnt just any old ordinary local blog.. The questions were asked by the Prof.

  27. TerjeP (say tay-a)
    November 17th, 2009 at 06:41 | #27

    Alice – if I frown at you whilst recounting an experience then the frown may be an expression of what I’m thinking and feeling but it is far from being a full account. In fact if I spoke a foreign language which you did not know you could remain quite unenlightened by my frown. Elections are similar expressions that tell us a condensed version of what the community is feeling at one point in time. If they prefer Howard over Keating or Rudd over Howard they have their reasons and they reveal their preference but Howard, Keating and Rudd do not represent the community at it’s best. We can expect at least 33 federal elections in a century but this number of decision opportunities is far too low to sensibly or collaberatively resolve the mirade wants, needs or differences within the broader community. And it entails far more centralisation of decision making than is sensible.

  28. Donald Oats
    November 17th, 2009 at 09:07 | #28

    And referenda. And state government elections. And local council elections. Sure, our democracy could be improved somewhat, perhaps more voting on issue type opportunities could be incorporated, and perhaps the professional lobbyist system could be shut out/down. Nothing’s perfect.

    Would Plato’s Republic meet your requirements, or the Athenian democracy Plato criticised, the one that had Socrate’s democratically voted to be put to death by hemlock? But I digress.

    Communities have local government, for better or worse. They have representation, which is one of the methods by which our democracry allows constituency influence on government policy.
    Society has – in our case – Federal Government. Communities across Australia metaphorically come together to elect a Federal Government.

    Where I would depart agreement with you Terje, is on your view that elections are a condensed version of what the community is feeling at one point in time. Surely the voters are able to see farther than one point in time? Whether their visions are prophetic or not is another question.

  29. TerjeP (say tay-a)
    November 18th, 2009 at 03:04 | #29

    Where I would depart agreement with you Terje, is on your view that elections are a condensed version of what the community is feeling at one point in time. Surely the voters are able to see farther than one point in time? Whether their visions are prophetic or not is another question.

    I agree that voters try and anticipate the consequences of their action. As such it does not seem like much of a departure. I don’t see that we are in disagreement.

  30. Alice
    November 19th, 2009 at 20:20 | #30

    @TerjeP (say tay-a)
    Well…Doug McTaggart has gone to ground and is probably hoping the thread will sink low enough down that his name doesnt appear…so if I make a comment it brings his name back up to the top. It is a shame he doesnt engage in open debate on this issue. I would be interested in his response and I think his (current) views would be an important contribution.

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