Home > Economic policy > Enough of these zombie ideas: let’s be bold

Enough of these zombie ideas: let’s be bold

March 13th, 2012

That’s the title of my last piece in the Fin (Thursday before last), which was about the zombie push for productivity (code for working harder) and the failure to pursue the genuine productivity gains that can be achieved through improvements in education, and particularly better education for kids from lower-income families. Ross Gittins made a similar argument, with some nice touches a few days later in the SMH. I particularly liked his point that the “productivity agenda” is essentially about making life easier for bosses.

Enough of these zombie ideas: let’s be bold

Labor’s leadership struggle, reminiscent of the Howard-Peacock battles of the 1980s, has raised justified complaints that personality conflicts have obscured the need for a new reform agenda. Indeed, neither of the contenders for the Prime Ministership offered much beyond the consolidation of measures dating back to the government’s first term. On the other side of politics, Tony Abbott offers nothing more than opportunistic populism and appeals to the politics of fear.

Sadly, however, the advocates of reform have little more to offer than our current leaders. Rather, they are pushing an agenda that also harks back to the 1980s: the tired old package of microeconomic reform, workplace reorganization and productivity growth. The benefits of this package, oversold at the time, have long since been exhausted.

Even back in the 1980s, careful estimates suggested likely benefits amounting to only a few per cent of national income.

In respnse, the advocates of microeconomic reform invented ‘dynamic productivity gains’ that would supposedly be unleashed by reform. They seized on methods of estimating productivity growth that appeared, for a few years in the mid-1990s, to reveal a ‘productivity miracle’ unparalleled at any time in our history.

In reality, the apparent increase in productivity arose from the increase in the pace and intensity of work produced by the combination of microeconomic reform and the adverse labour market conditions that followed the ‘recession we had to have’. These increases in effort weren’t sustainable, and as Herbert Stein famously observed, a trend that can’t be sustained won’t be.

The speedup in the pace of work, and the resulting problem of work/life balance were described by John Howard as a ‘barbecue stopper’.The imbalance between work and life was apparent to everyone in Australia except the economists looking at the productivity statistics. Although work intensity can’t be measured directly, we can look at related measures such as the number of people working extremely long hours and the proportion of workers compensation claims citing stress. All these measures rose during the spurious productivity miracle of the 1990s, and fell back again during the 2000s. As a result, measured productivity growth slowed to a crawl in the 2000s, even as good macroeconomic performance and favorable terms of trade allowed steady increases in living standards.

The way ordinary Australians understand the push for productivity was underscored by the outpouring of anger against WorkChoices, and the lack of any support for its revival. As has been shown on numerous occasions, Australians understand that ‘workplace reform’ and ‘productivity’ are codewords for ‘work harder and faster, with less autonomy’. Yet, presented with a vacuum at the level of political leadership, the advocates of refrom can come up with nothing better than another attempt to reanimate these

Meanwhile, reforms that could produce genuine and sustainable improvements in productivity have languished. Rudd’s ‘Education Revolution’ is barely a memory. Julia Gillard, who once made much of her passion for education, dropped the phrase the moment she left the portfolio behind. Throughout her period as Minister, Gillard pointed to the forthcoming Gonski review of school funding as a reason not to take any substantive new steps in this area.

Gonski’s committee finally reported last week. It made a powerful case, on both equity and efficiency grounds, for a substantial increase in funding to the most disadvantaged schools, almost all of which are in the public sector. If we are to become a more productive nation, we cannot afford to lose a quarter or more of our young people to inadequate education and social exclusion.

The alternative can already be seen in the United States, where what was once the land of opportunity is now characterized by the highest levels of inherited inequality in the developed world, largely because of unequal access to education.

Gonski’s report was dead on arrival. Responding to the report, Gillard made it clear that the government’s need to achieve a surplus by 2012-12 trumped any need for long term investment in our future.

Naturally, the advocates of ‘bold reform’ are nowhere to be seen in this fight. The only concern of free-market thinktanks like the Centre for Independent Studies is to protect the class interests of wealthy private schools ‘Gonski: less for private schools, AFR 21/2/12’.

This is, indeed, a time for bold new ideas about reform. What we are getting instead is personality politics and zombie economics.

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  1. Gabrielle
    March 15th, 2012 at 12:13 | #1

    I think that when discussing whether increased funding to disadvantaged schools will make a difference it would be a good idea to have some understanding of conditions in these schools. In some schools in the greater Brisbane area a significant proportion of students go to school without food before school and they also take no food to school. Under those conditions learning cannot take place. Many students have never seen a book before they go to school and their parents do not see any value in education. There are significant numbers of high school students who cannot read beyond lower primary levels because they had mild learning difficulties which have never attracted funding as they ate not apparently bad enough. There are many behavioural issues which result from many causes amongst which are abuse and neglect. All schools are staffed on a ratio of numbers of students to number of staff. All get the amount necessary to cover building maintenance. There is a pilot federal government scheme which has increased funding in some schools with limited parameters concentrating on teacher performance. A great deal more needs to be done for those kids. I don’t see enough discussion of these issues anywhere. How is it not obvious that these children would benefit from better funding in their schools? The conversation should be about how to spend the money not whether to spend it.

  2. Ikonoclast
    March 15th, 2012 at 12:38 | #2

    @Ernestine Gross

    Ernestine, you say, “Comparisons of countries on the basis of one institutional factor (eg monetary sovereignity) are, IMHO, worse than useless even in a time series context. Theories that rely on such methods result in Zombie ideas (such as neoliberalism and MMT).”

    In Bill Mitchell’s (and MMT’s) defence, I don’t think Bill relies on one factor, institutional or not, in his analysis. I think his analysis is a little broader than that. Did you read his article that I linked to? Monetary sovereignity and more broadly fiscal and monetary policy are key factors in how a government manages or attempts to manage the economy. Thus monetary sovereignity or lack therof is clearly a factor which must be taken into account. If lack of monetary sovereignity is the kind of policy straight-jacket that MMT propounds (foreclosing fiscal and monetary policy possibilities) then it is clearly significant.

    However, I would like to see you put forward your proposals for running an economy, Australia’s in particular. What economic policies and settings would you recommend? What regulations and legally enforceable institutional changes would you enact?

  3. Ernestine Gross
    March 15th, 2012 at 12:43 | #3


    “The conversation should be about how to spend the money not whether to spend it.” Fully concur with you in the context your have given.

  4. Ikonoclast
    March 15th, 2012 at 12:56 | #4


    I can’t envisage a “family” so bad that it cannot feed a child before school or send a school lunch with the child. In any situation so dysfunctional the child should be removed immediately. However, that presumes a state care and foster system far better than our current set-up. Once again, free market liberalism fails society; unemployment, social alientation, underclasses, drug abuse and a host of other ills flow on from letting the free market determine everything.

    When I grew up in the 1960s, such neglected children were very rare even in the working class suburbs where I grew up. Our national system was much more “socialist” then than it is now. Housing commission suburbs, cheap housing loans to returned soldiers and free milk for kiddies at morning tea (“little lunch”) are some of the socialist measures I remember and these served our nation well. In addition, education was free right up to and including tertiary level.

    Since we let the market take over, our nation has been going to the dogs.

  5. Dan
    March 15th, 2012 at 13:12 | #5


    I can’t envisage a “family” so bad that it cannot feed a child before school or send a school lunch with the child.

    It’s unfortunately pretty common. My mum was a primary school principal at probably the most disadvantaged primary school in the ACT (at that time, possibly still) and I think regards getting a breakfast program together as one of major programs, if not the major program, she introduced to improve kids’ attendance and performance there.

    Bear in mind that many of the parents of said kids never benefitted greatly from education themselves (for a variety of reasons), which makes the situation a little easier to comprehend.

  6. Gabrielle
    March 15th, 2012 at 13:22 | #6

    Foster care is not the answer but government funded breakfast and lunch programs are, administered at the school level by P&Cs and school admin. It wouldn’t be necessary except that the same issues which apply in remote indigenous communities and have attracted an hysterical reaction also occur in suburban communities. Nutritious food is not the cheapest option anywhere. Rents are also very high in proportion to people’s income. However I think we should focus on how to help children have equal access to educational opportunities which they don’t have at the moment. This is just a traditional social democratic perspective but I think the reality of poverty must be faced and we shouldn’t pretend that schooling is a only a straightforward matter of what happens in classrooms, or that teachers are just failing in disadvantaged schools. The conditions in these schools are never discussed except in a kind of tabloid newspaper way and I think it would be great to avoid that.

  7. Alan
    March 15th, 2012 at 13:38 | #7


    In any situation so dysfunctional the child should be removed immediately.

    How is this different from the sort of censorious wowserism that masquerades as social democracy in the prime minister’s rhetoric? Easy, it is a harsher measure than Gillard advocates. She just wants income management. There are no one child fits all solutions, which is why international human rights law requires case-by-case decisions on child welfare.

  8. Sam
    March 15th, 2012 at 14:15 | #8

    Sure. I think social democrats give away too much when they concede the equity-efficiency trade-off meme. Certainly such trade-offs exist in micro-economics, but the three cases I cited are just bad all round.

    Take the HECS system. If it were to have any impact at all on efficiency and productivity, it would be by reducing student over-consumption of higher education. But there’s no evidence that student over-consumption was a big problem before HECS, or that to the extent it was a problem, things got markedly better post-HECS. Even if you think that things like arts degrees for rich kids are useless, and the government shouldn’t be subsidizing consumption of this luxury good, HECS hasn’t markedly stopped rich people from doing them. On the downside, there is plenty of reason to believe that under consumption of higher ed at the lower end of the income scale was a problem pre-HECS, and that this has been exacerbated. Lots of bright high school graduates from poor backgrounds are deterred by the prospect of high debt, and so stick with more menial jobs, lowering their lifetime productivity. Meanwhile, HECS itself costs an enormous amount to administer, increasing the number of paper pushes in society that could otherwise have been doing real work.

    Similarly in private health. Private hospitals are more or less just as productive as public ones, but private health financing (through insurance companies who try to deny as many claims as possible) is much less efficient than medicare and direct hospital funding. The system of carrots and sticks we have for encouraging more people into private health (the medicare surcharge and the private health rebate) are themselves expensive, requiring an additional army of private and public sector bureaucrats, and they also increase this extremely inefficient financial insurance industry.

    Superannuation somehow manages to minimize choice, transparency and long run returns, while maximizing red tape and inequality. It’s one of those rare projects which outrages both my libertarian and my socialist sensibilities. A huge amount of tax revenue is foregone by the government to subsidize the retirement of the rich (many times the total yearly amount of the pension). This amounts to a welfare measure with a reverse means test; this is both unequal and inefficient. For people on low incomes, yearly fees are larger than accruals, and for the last couple of years accruals have actually been negative. People are thus forced to pay psychopathic hedge fund managers they have no effective oversight of, to gamble (and often lose) with their money in the great casino of financial capitalism. JQ showed last year that over 30 years, bonds have actually outperformed stocks, so why are we forcing people to buy stocks? They would be much better off if they simply had access to their own money and saved by paying off their mortgage more quickly. This would be much more efficient, enabling them to pay bank mortgage fees for less time, and also reduce reliance on incompetent stock brokers. If the government still thought people were saving too little for their retirement, they could easily double the pension for a fraction of the revenue currently foregone in superannuation tax incentives.

    In case the above was TLDR, here’s the rub. Private health, HECS, and superannuation enormously financialise the economy, which increases the number of people doing nothing directly productive. These measures fail to increase efficiency in other areas. Ergo, these measures reduce productivity.

  9. Sam
    March 15th, 2012 at 14:32 | #9

    I don’t want to psychoanalyze micro economists here, but I think many suffer from the cognitive bias of mistaking beauty for truth. If they can design a system which internalizes a cost, or removes some implicit subsidy, they are immediately drawn to it.

    Never mind if the new system introduces an enormous new transaction cost, because to a zeroth order approximation such costs can be neglected. Never mind investigating the actual extent to which the externality was altering behaviour for the worse, they just know that such externalities are bad bad bad and must be designed away.

  10. Michael
    March 15th, 2012 at 14:55 | #10

    It seems to me that the argument between universal public healthcare and private healthcare has been won in terms of economy wide outcomes. It would be interesting to look at education outcomes per dollar spent to see if private schools in Australia are delivering value for money to the economy. I don’t necessarily have a problem with non-government schools existing, but they should be either completely financially independent and taxed as a normal company or they should operate under the same rules as government schools. Some countries seem to operate schools this way. I think part of the increase in property prices is driven by a perfectly understandable desire of parents to get their kids into good schools. Universal access to a good school education should be a major concern for future productivity. In this light private schools are making this less likely rather than more likely.

  11. Jim Birch
    March 15th, 2012 at 15:10 | #11

    Sam :

    micro economists … suffer from the cognitive bias of mistaking beauty for truth.

    Perhaps, but they are still a thousand delusions from the impregnable celestial fortresses of some macro economists.

  12. Sam
    March 15th, 2012 at 15:43 | #12

    @Jim Birch
    No argument here. Macro economists ( in general, and with honorable exceptions) have been worse than useless during the current crisis. Their unlearning of hard-won insights from 70 years ago have cost just the US economy alone more than 5 trillion dollars and counting.

  13. zoomster
    March 15th, 2012 at 17:49 | #13

    Kids going to school without breakfast – or a packed lunch – is caused by exactly the pressures on families Quiggin raises.

    If both parens have to work, they’re very likely out of the house before the kids head off to school. It’s certainly unlikely that they’ve got the time to make sure the kids are eating right or packing lunches.

    This scenario is exacerbated by the changes to the single parent payment, which means the poorest families are less likely to have an adult around in the morning.

    Many schools I know of have at least one breakfast morning a week, where meals are supplied. But obviously one meal a week isn’t enough.

  14. March 15th, 2012 at 19:33 | #14

    The only real ways to get ‘productivity improvements’ are:

    - more automation — computerisation or machines
    - working longer hours for less money — like the employees at Foxconn in China or in the satanic mills of the early industrial revolution — it’s a little hard to compete with that, but maybe we can create an underclass to do it, a la Huxley’s Brave New World or HG Wells’ Time Machine.

    This is so that the bosses can have sumptuous and indulgent lunches and dinner parties, larger houses, and spend a lot of quality downtime on their yachts — a necessary secular shift heavily endorsed by Liberals like Peter Costello and neoliberal Laborites like Julia Gillard. Makes you want to work harder, doesn’t it?

    In the meantime, the Keynesian BER stimulus plan for construction workers has left a large-ish deficit, and the new school halls don’t seem to be making kids any brighter. No money left over to educate the kids after all that capital expenditure to keep some adults in work. ‘MySchool’ and the NAPLAN have succeeded in its ‘individual consumer choice’ way of increasing disadvantage at the worst performing schools in a downward spiral as better students flee, while the Gonski report now says the worst schools should be receiving more funding, which would have negated the need for a NAPLAN. And apparently state govts, including Labor govts, are hopeless at running schools and needed the Gillard ‘MySchool’ touch to set them back on the straight and narrow.

    And never forget, house prices to the moon!

  15. Ikonoclast
    March 15th, 2012 at 19:35 | #15


    Zoomster, I think you would actually find that where both parents work, said parents are motivated enough and organised enough to still look after their children’s needs properly.

    You said,

    “If both parents have to work, they’re very likely out of the house before the kids head off to school. It’s certainly unlikely that they’ve got the time to make sure the kids are eating right or packing lunches.”

    Often, when both parents work, one is part time, or if both are full time they manage to organise hours with their employers such that one parent is the early starter and early home-arriver and the other is on a later schedule. An off-set of even one hour can be enough to enable the household to function. My wife and I did it for many years.

    School lunches can be made the night before and put in the fridge or freezer as appropriate. The “late” starter can handle breakfast for the kids (how hard is juice, breakfast cereal and an omelette cut into 3 or 4 pieces for goodness sake?) and take the kids to school. Even relatively early drop-offs can be negotiated with some schools. After school the kids can go to OSH club (Outside School Hours care) until the early schedule parent swings by to pick them up, go home and cook dinner.

    On another topic, not feeding kids properly is pretty serious neglect. Even before outright starvation, various deficiencies and developmental problems can occur. I refer here to an earlier post that inferred I was being draconian for suggesting removal of kids who are not nourished properly. I did add the caveat that proper state/foster care systems would have to be built up (rather than being degraded as under neoliberalism). Perhaps, I also should have added the caveat that social work help, nutritionist help etc. be given first to assist and tutor the parents to look after the children better. This is where it is assessed that parents are basically well-meaning and capable of absorbing such help.

  16. Alan
    March 15th, 2012 at 21:27 | #16


    After some years in a children’s court I could give you half a dozen examples of why kids turn up without lunch that involves no hint of neglect or abuse. I am glad you added the caveat although removing a child is a matter for a court, not a social worker. The essential problem is children, even very young children, who just don’t see much of their parents before or after school. You’d be astonished how many children get to fend for themselves because their parents are working the absurd hours demanded by our modern ‘productive’ economy. Putting everything back on the parents just does not give the whole picture.

  17. Alan
    March 15th, 2012 at 21:32 | #17

    Hit the button too early.

    The other problem is that the state has privatised the care of state wards like everything else. There are very few residential facilities and while most foster parents are caring individuals they just don’t have the skills or resources to deal with children who are the victims of serious abuse. The result is that ‘difficult’ kids get shuttled from foster parent to foster parent because the placement keeps breaking down. The state will however happily accommodate any number of children in juvenile detention once they’ve offended.

    If you designed a system to add to the burdens of kids who already have an incredibly bad life it would be hard to keep up with something worse than what we’ve got.

  18. Dan
    March 15th, 2012 at 22:11 | #18


    Thanks. I don’t completely buy your analysis but will think carefully about it.

  19. Sam
    March 15th, 2012 at 22:38 | #19

    Sure, I’d genuinely welcome criticism of my position. I must say though, I’ve rarely actually heard the HECS system being defended on efficiency/productivity grounds. Usually, the promoter either makes moral arguments about self-made bricklayers subsidizing college brats, or simply says the country “can’t afford it anymore” (though it could afford it in the 70′s when we were supposedly much poorer).

  20. Ikonoclast
    March 16th, 2012 at 07:26 | #20


    I don’t resile from my position that dual working parents can still look after children properly if they are organised and concientious. However, I take your points that the “neoliberalising” and excess privatising of the economy have done a lot of damage. I grew up in the 1950s and 1960s and was university educated in the 1970s. Australia was much more socialised then and a true Commonwealth (meaning both “wealth in common” and the “common good”). We could afford free tertiary education then as Sam points out. Now, we are no longer a true Commonwealth. We are a trashed, semi-ruined, neoliberalised junk-heap.

    The push to allow women equal rights in the workplace was (and is) a good movement. With proper social and socialised policy this works well and children too can benefit. From at least toddler-hood onwards, children benefit from the additional socialisation embodied in childcare and like environments. It takes a whole village to educate a child as the old saying goes. The old nuclear family with an isolated, neuroticised housewife-mother and a cooped up young brood under her feet was not necessarily the best incubator for childhood development.

    What happened however was that neoliberal, corporate capitalism was permitted to pervert the course of women’s liberation into the workforce. Under neoliberal economic theory, the baneful influence of the spurious NAIRU theory and of course just plain chauvinism, women’s labour was under-paid and used to drive down labour costs. At the same time, the capitalists realised that debt levels and mortgages could be driven up by excess lending and a consequent asset bubble because households now had dual incomes to pay the mortgage.

    The entry of women into the workforce should not (on the face of it) have been inflationary. At least equal new productivity was being added along with the new wages. In fact, as women were consistently underpayed, the net outcome ought to have been slightly deflationary without capitalist manipulation and speculation via the finance industry.

    The liberation of women into the workforce is not the problem. Neoliberalism and corporate capitalism is the problem.

  21. Ernestine Gross
    March 16th, 2012 at 08:26 | #21


    My reply to your post @2, p2 comes in 2 parts.

    1. The topic monetary and fiscal policy independence of sovereign nation states is not new. It has been the subject of investigation during the Keyenesian era, characterised by the Bretton-Wood system. Even during this era of relatively ‘heavy regulation’ of the financial system, nationally and internationally, the idea of printing money (because we can) and fiscal policy independence has not prevailed for good reason (consult textbooks from the 1970s or Handbook of Monetary Economics). So, the interdependence of ‘national economies’ is also not a new idea but the idea of aiming to treat the world as ‘one market economy’ (globalisation) is a relatively new one and it is a mighty lazy one, if I may say, one that belongs to the Zombie bin. I leave it up to you to adjudge whether the idea of printing money (because we can) makes sense under current national and international regulatory conditions.

  22. Ernestine Gross
    March 16th, 2012 at 09:01 | #22


    Part 2:

    2. You say: “However, I would like to see you put forward your proposals for running an economy, Australia’s in particular. What economic policies and settings would you recommend? What regulations and legally enforceable institutional changes would you enact?”

    No offence, Ikonoclast, when I say only a fool or a dictator suffering from megalomania might wish to respond to your first sentence. I don’t think you intended me to take this sentence literally. So, here are some suggestions that might marginally fit the topic of this thread:

    Corporations and corporatism. Corporations are not necessarily run along corporatist lines. The corporate form of business is often considered to be unavoidable due to the nature of physical production technologies. I accept this without excluding mutuals or other forms of pooling resources. But corporatism – a form of management – is, IMHO, undesirable, not least because it is inconsistent with that part of the idea of a ‘market economy’ which is compatible with the idea of democracy. The objective, in broad terms, is to arrive at an institutional framework where the ostensibly useful part is kept while limiting or excluding the undesirable part. To this end I put forward the following::
    a) Limit the life of corporations via a licensing system such that corporations can re-apply for an extension of their life. This would return a bit of power to the citizens and allow other than financial accounting criteria to enter under the heading ‘accountability’. It might also reduce the leveraged merger and takeover activities and other predatory behaviour.
    b) Legislate that all profits are paid in dividends such that shareholders can choose whether they wish to reinvest via a dividend reinvestment scheme. Electronic communication technologies have reduced transactions costs significantly.
    c) Bonus payments in publicly listed companies should be either set to zero or taxed at 80% or more.
    d) Reduce or eliminate the bureaucracy associated with ‘corporate governance’ and challenge and debunk the whole idea of ‘corporate governance’.

    Financial sector. Quantitative limits for all financial securities, including fiat money. The quantitative limits would be in the range of [0, n] , n being a finite number or a function of a variable that has a limited range such that for some financial securities (eg some derivatives) the maximum number that can be issued is 0. (I recall JQ made a specific recommendation on the onus of proof for the introduction of financial securities). I don’t have in mind the quantity rule as found in monetarism. Monetarism applies a rule only to fiat money. This does not work. IMHO, nobody knows for sure what the quantitative limits should be for any time period. But a limit is important because of an ‘unboundedness problem’. There are two approaches found in the literature. One is to introduce an essentially arbitrary limit (eg Radner). The other is to rely on people having strictly risk averse preferences and the ‘right’ price expectations (see O. Hart). The second approach has been proven several times over to not work (at least not for any economy larger than a town of say 10000 people who live in a state of self-sufficiency). The first one provides more prospect of success, although it seems to me the word ‘arbitrary’ is sufficient and proper for getting a theoretical result but not in real life. It is at this point where ‘monetary policy’ enters, meaning that quantity limits can be moved within a movable band within the context of parliamentary democracies and public discussion.

    As I’ve noted on many occasions I consider the financial accounting framework (balance sheet approach) to be inadequate for both monetary policy and income distribution policy. We need a better financial transactions record keeping system.

    Education. I agree with those who argue social cohesion as well as democracy are enhanced by an academically solid and well funded public school and university system. In a sense, an education system is like an information and knowledge infrastructure that spans generations. The whole is bigger than the sum of its parts. There may be productivity implications. For example, what is the use of having ‘top’ engineers if construction workers can’t read instructions and can’t use measurement equipment?

    Getting to a bolder point, the provision of education in law at university level should be made free with minimum entry requirements (can read and write English in Australia). The aim is to provide all members of a society with access to information on the institutional environment which they are assumed to have. I believe this is important particularly in societies with significant income inequalities and inequalities in power over financial resources (eg individual vs corporations). Whether this access to crucial knowledge about the rules of the institutional environment of a society is provided via an “Open University” or via very large lecture theatres or some other technology is for Universities and Law Schools to determine. Similarly, whether those who wish to practice Law specialise after some time or enter a different stream is for the Universities and Law Schools to determine. (Some Schools of Mathematics have managed to provide programs along the line suggested here.)

    Workplace relations. It seems to me the policy changes introduced by the current government go in the right direction. What is left unattended is the application of the notion of ‘fair go’ within enterprises. The proposed changes to corporate law may help in this regard – but who knows. Work place bullying should be made unlawful. (Hasn’t Victoria introduced such a law already?)

  23. Ernestine Gross
    March 16th, 2012 at 09:17 | #23


    “The liberation of women into the workforce is not the problem. Neoliberalism and corporate capitalism is the problem.”

    Neoliberalism can be blamed for many things but to tie “the liberation of women into the workforce” to neoliberalism is, IMHO, overstretching both, the notion(s) of ‘liberation of women’ in contemporary life (my grandmother had a successful business) and the notion(s) of neoliberalism. Similarly, a distinction of the ‘capitalist’ corporate form of business and ‘corporatism’ and ‘corporate governance’ creators seems to be useful here. In some cases properites of individuals who rise to ‘the top’ may be the problem.

  24. Tom
    March 16th, 2012 at 09:28 | #24

    @Ernestine Gross

    The problem in the education system is not only entry and cost to study. There are some serious problems including the quality of the information the students are receiving.

    Especially in law and economics, in company law subjects that studies the Corporations Act there is an appearance that the corporations are ‘heavily regulated’ under ASIC; however every accountant knows that ASIC is a ‘fake watch puppy’ that is set up to blind the eyes of the public. They do nothing to regulate the business operations but ‘may’ only act after the business has collapsed or years after significant breaches. The only way to fix this? to set up the head office in an area that can attract higher standard professionals and contribute more fundings to ASIC through higher taxes (a policy impossible to sell to the public with the current media); because those are the two biggest problems ASIC have (in my opinion). Also universities should be clear to students they teach that ASIC and neoclassical economic theories they teach are useless junk if they have any ethics and for the future education system and generation to improve. In the end, what’s the difference of reading the Daily Telegraph and receiving useless or false information from universities?

  25. Ernestine Gross
    March 16th, 2012 at 12:56 | #25


    You are entitled to your beliefs.

    nteresingly, though, while you reject ‘entry and costs’ as a problem (who said it is the only problem?) for education, you seem to be very sure that “the only way to fix this (your stated problem with ASIC)” are conditions on entry and costs.

  26. Alan
    March 16th, 2012 at 13:26 | #26


    I don’t resile from my position that dual working parents can still look after children properly if they are organised and concientious.

    No-one could disagree with that position. However, shit does happen and it is not always within the control of the parents or the other villagers. The obvious solution is for the school to provide meals, but that would cost money and impede the ever faster progress towards a state that collects no revenue at all.

    I’ve always found it very strange that the US seems to have had this socialistic system of schools feeding kids for its entire history. A surprising number do, including Finland. In France the lunchbreak is long enough to go home if you want and if you eat at school the long lunchbreak is a chance to inculcate the French obsession with good food.

  27. Tom
    March 16th, 2012 at 14:33 | #27

    @Ernestine Gross

    I’m not rejecting cost and entry as a problem, from what I’ve said “The problem in the education system is not only entry and cost to study” how did I reject them being problems? If that statement meant that I was rejecting them being a problem of the education system then let me apologise; I meant to say they are problems but there are other major problems.

    What I’m implying is that even if there can be more people going to university, the society won’t benefit a thing from them being teached neoclassical economic theories or ‘facts’ that are not actually backed by evidence and reality; but of course subjects such as engineering, robotics, IT or art and most others of subjects do benefit the society.

    If you want some example all you need to do is pick up any university economic textbook and read any chapter you’ll understand what I meant. After that then think about how students feel if they knew neoclassical economic theories are nothing better than junk and had to study it through their whole bachelor course.

  28. gerard
    March 16th, 2012 at 17:17 | #28

    Speaking of Fin columns, who the hell is Jennifer Hewitt and why does she get the whole of Page 2 to herself every day now?

    The Fin has gone noticeably downhill since Stutch took over and decided to turn it into Oz-Lite. I’ve cancelled my subscription.

  29. Ernestine Gross
    March 16th, 2012 at 20:49 | #29


    Quite right, my first sentence at 25 is muddled. Let me correct it. In reply to your statement: “The problem in the education system is not only entry and cost to study.” I intended to make clear that I did not say entry and cost are the only problem and I wanted to know who asserted that entry and cost are the only problems.

    I further noted it is interesting that, in contrast to your opinion about the education system, you seem to be quite sure that the only solution to the two major problems you identified with ASIC concern entry conditions (to attract higher standard professionals) and costs.

    Perhaps a bit of detail is called for.

    What evidence do you have that “in company law subjects that studies the Corporations Act there is an appearance that the corporations are ‘heavily regulated’ under ASIC;” ?
    What evidence do you have that”, however every accountant knows that ASIC is a ‘fake watch puppy’ that is set up to blind the eyes of the public.”
    What evidence do you have that ‘every accountant’ knows what you claim?
    What evidence do you have that the aggregated information of ‘the public’ does not exceed the knowledge of every accountant?
    What evidence to you have that “They (ASIC) do nothing to regulate the business operations but ‘may’ only act after the business has collapsed or years after significant breaches.” in all cases?
    You ask: “The only way to fix this?” I don’t know because I have no evidence that anything needs fixing.
    You say in reply to your question: “to set up the head office in an area that can attract higher standard professionals”
    What evidence is there that ‘higher standard professionals’ actually exist in any area?
    Further in reply to your own question you say: “and contribute more fundings to ASIC through higher taxes (a policy impossible to sell to the public with the current media)”
    What evidence do you have that more funding to ASIC is solving anything?
    What evidence do you have that it is impossible to ‘sell to the public’ higher taxes with the current media?

    You have presented me with a theory. I leave it up to you to adjudge the quality of your theory.

  30. Chris Warren
    March 16th, 2012 at 21:22 | #30

    @Ernestine Gross

    What are you saying? If someone says liberation is not a problem. How does this tie liberation into other things that are problems?

    Presumably if someone uses the adjective ‘corporate’ before capitalism they have already made the distinction you call for.

    Plenty of people have had successful businesses, it is the underlying capitalist economy that is unsuccessful. Plenty of people have failed businesses.

  31. Ikonoclast
    March 17th, 2012 at 09:08 | #31

    @Ernestine Gross

    Ernestine, I am replying briefly to all your posts. I don’t think it grandiose for a tertiary educated economist to have some opinions on how the overall economy should be run. :) In fact, I would be worried if she or he did not have some opinions in that area. It’s probably grandiose for me (a dilettante autodidact in economic matters) to have such opinions.

    I find I agree with most of your points, which might surprise you. I think we definitely agree on reining in corporate power. Also we agree in principle on limiting and controlling financial instruments, particularly speculative ones. I don’t know enough to have an opinion on whether you particular suggestions would work. Again, we agree on the importance of education and funding it properly. A blog I read recently suggested that California’s penal system expenditure (going up on the graph) has now crossed its educational expenditure (going down on the graph). If true this is most disturbing and a clear diagnostic for what is wrong with the USA.

    With respect to printing money, neither I nor MMT suggest that a sovereign currency can be printed ad infinitum without inflation and without regard to the economy of real goods and services. The difference is one of emphasis which you seem not to perceive or else perceive differently to me. MMT suggests that the real economy is the object not the budget outcome. MMT suggests that targeting a budget outcome for its own sake and regardless of the state of the real economy is not sensible. MMT suggests budget deficits where there is a lack of capacity utilisation (unemployment etc) up to the point where unemployment (apart from the frictional) is solved. The proviso would be that the currency is not debased by excess inflation in this process.

    Concomittent with this process would be better control of the issue of debt money by the banks. It seems to me axiomatic that excess bank issued debt money also creates inflation. Control of this source of inflation would widen the scope for more fiat money creation without inflation pressure. The economic difference is that the government can apply the new fiat monies to educational spending (for example) rather than bank issued debt money fuelling (as it does) asset price inflation like housing prices. This would advantageously re-jig the economy IMO.

    Finally, I did not tie the liberation of women into the workforce to neoliberalism. That is a complete misreading. (Maybe I did not express myself well). The liberation of women is very much an anti-neoliberal movement. I did say that neoliberalism economically hijacked the liberation of women by underpaying working women (and working men to a lesser degree) and taking the opportunity to push up overall debt of 2 worker households.

  32. Tom
    March 17th, 2012 at 09:28 | #32

    @Ernestine Gross

    In regards to ASIC, it’s quite difficult to find evidence about all those statements. E.g. I’ll be surprised if there is a data on how many percentage of the accountant profession think ASIC is useless. However with that being said, it is a generally regarded in accounting profession that they are useless because they fail a lot of their roles in the ASIC Act, and even when cases are reported that reporting entities breached accounting standards there is not a great chance of them proceed with investigation unless after the company collapses.

    ASIC’s headquarter is based in Morwell in Victoria where the town has little attraction to professionals, e.g lack of entertainment. For Example say if you are an accountant would you rather work in the major city CBDs or in towns that are more boring than Canberra? It is one of my thoughts on the matter although it is true I have little evidence to back that claim.

    Second with regards to more funding might improve the performance of ASIC, anybody works, know or involved in law cases should understand how much they cost. Especially if the law case might be some of the largest companies in the economy. With the high cost of legal fees, investigation cost etc. it is quite risky for ASIC to investigate any claim because they might not be able to gather enough evidence or enough fundings to proceed with pursuit of legal action. It is because of so that “I believe” is the reason why they pursuit action after company has collapsed or cause major problems most of the time (if not always).

    With the final statement about higher taxes will be impossible to sell to the public, do I even need to prove it? I mean anyone lives in Australia with a grasp of reality knows that carbon price is not an easy sale, even if it’s not even half the GST. The carbon price and MRRT has been so damaging on the labour party as to swing voters if anyone believes that they are easily sold to the public they are not being realistic. Now do you believe that an increase in company tax or income tax etc will be easier to sell than MRRT and carbon price?

  33. Ikonoclast
    March 17th, 2012 at 09:32 | #33

    As an addendum, I would say that money is a tool. The real object as I said is the functioning of the real economy, the delivery of real goods and real services for the needs of real people. Deficit monies and bank debt monies in particular are tools of leverage (like a crowbar to make a simple analogy). When using a tool of leverage one exerts the maximum leverage necessary up to the point that does the job or up to the point that would bend or break the tool. Crowbars are heavy but of soft steel so they bend rather than break. Moderate bending is mendable.

    In a basically healthy economy, currency demontrates this quality too in relation to inflation. It is malleable rather than brittle. The currency bends (moderate inflation) before it breaks (hyperinflation). Thus we can push the deficit lever until it bends (moderate acceptable inflation). If the contaminating alloy of bank debt money is reduced, the deficit lever is stronger and can do more work without breaking and creating hyperinflation.

  34. Chris Warren
    March 17th, 2012 at 12:20 | #34

    “more boring than Canberra”? … reading posts from Tom.

  35. Tommo
    March 19th, 2012 at 20:23 | #35

    Look, the only way that Australia can improve the functioning of its economy is if we stop educating all these kids that are never going to need an education anyway. What we need is cheap labour for our factories and coal mines so that we can compete with China again. To get that we have to stop educating all these kids as its costing a fortune and reducing our competitiveness, and then they want all this stuff which is causing us a balance of trade issue. If we import less and export more, everything will be great for those willing to provide leadership by extracting maximum efficiency from their workforce – and the economy will be working the way the economists want it again. + we won’t have to worry about those workers living so long and needing pensions to boot. Get all these kids off the internet and into real work, I say.

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