Home > Economic policy, Oz Politics > Labor, hiding its light under a bushel

Labor, hiding its light under a bushel

August 7th, 2013

A bit belatedly, a piece I posted on Crikey a couple of days ago, bemoaning Wayne Swan’s failure to tell the story of the government’s success in managing the GFC. His obsessive pursuit of a return to surplus with a fixed target date suggests to me that he never really saw Keynesian fiscal policy as anything other than a once-off emergency measure, and that the credit for the government’s courage in 2009 must go to Ken Henry and Kevin Rudd. Regardless, the government should be winning the economic debate hands down, instead of being on the defensive.

Labor cover-up to hide successful economic management

The first thing to be said about the economic policy debate in the lead-up to the election is that we shouldn’t be having one. Economic outcomes under Labor have been good in absolute terms and spectacular when the global economic environment is taken into account. At least as regards the medium-term settings of fiscal and monetary policy, it is hard to see any reason for change.

Labor’s economic success can be traced back to the vigorous and effective response to the global financial crisis of 2008. The government undertook a highly effective fiscal stimulus, co-ordinated its fiscal policy with the monetary policy of the Reserve Bank and fixed major vulnerabilities in the system of prudential regulation, most notably the absence of a deposit guarantee.

The results speak for themselves. Almost alone in the Organisation for Economic Co-operation and Development, Australia escaped recession, whether this is judged on the “two quarters of negative growth” rule of thumb or a more general assessment of economic performance. Inflation has remained quiescent, sitting right in the middle of the Reserve Bank’s target range. Unemployment remains near its 30-year low. Despite unfavourable demographic trends associated with the ageing of the baby boomers, the employment-population ratio is near an all-time high.

At the same time, and despite the global crisis, some of the chronic imbalances that threatened the Australian economy when Labor came to office have abated. The bubble in house prices that emerged in the early 2000s has deflated gradually, in marked contrast with the disastrous bursting of such bubbles in many other countries. Household savings rates, negative in the last years of the Howard government, have recovered strongly to levels not seen since the 1980s. The ratio of foreign debt to national income has declined, and debt has been redirected from financing consumption (including consumption of housing services) to financing investment, primarily in the mining sector.

It is, of course, possible to argue about the appropriate division of credit between this government, its predecessors, the success of monetary policy under the Reserve Bank, and the favourable external circumstances of the mining boom. But on the most important question of how we managed to avoid the effects of the GFC, there can be little doubt that it was government policy that was responsible. The close co-ordination between fiscal and monetary policy means that there is no sense in separating the credit due to the Reserve Bank from that due to the government.

It is possible that a Coalition government, faced with strong advice from Treasury in favour of fiscal stimulus, would have abandoned the focus on headline measures of budget balance that characterised the Howard-Costello era. Under the actual circumstances of the crisis, however, the opposition, then led by Malcolm Turnbull and Julie Bishop, with Joe Hockey as shadow treasurer, opposed the stimulus and proposed instead to pursue permanent tax cuts.

In retrospect it has been claimed that demand from China, and the mining boom more generally, meant that stimulus was unnecessary. This claim is nonsense for at least three reasons. First, minerals prices fell sharply in the immediate aftermath of the crisis, making Australia more rather than less vulnerable. Second, the rapid Chinese recovery was due to the policies of fiscal stimulus very similar to those adopted in Australia. And finally, the failure of economic recovery in other countries that turned rapidly to austerity once the immediate crisis was past is a further demonstration of the validity of the Keynesian analysis.

If public debate were remotely rational then, the best course for the opposition would be to change the subject. Instead, we are in the absurd position where the LNP was until recently seen as better at economic management than Labor, and the Coalition remains equal.

Much of the blame for this fiasco must go to former treasurer Wayne Swan. Whatever the substantive merits of the policies he oversaw, Swan failed to show any conviction in defending them. The huge success of Keynesian stimulus should have resulted in a fundamental reconsideration of the “fiscal conservatism” inherited from former PM John Howard and former treasurer Peter Costello. Instead of pursuing a target of balance or small surplus every year, Keynesian theory prescribes a counter-cyclical policy of deficits in recession and surpluses in booms.

While occasionally paying lip service to this idea, Swan’s public rhetoric mostly treated the GFC as an embarrassing departure from reality and the return to budget surplus as a holy grail. His oft-repeated promise to return the budget to surplus by 2012-13 was, of course, a disastrous failure in practice. Even worse though was the rhetorical gift to the spurious economic analysis propounded by Opposition Leader Tony Abbott, in which budget surplus is the sole goal of fiscal policy.

Similar points may be made with respect to prudential regulation. While the Australian financial system survived the crisis very well and with relatively limited government intervention, the crisis exposed fundamental flaws in the reasoning underlying the light-handed regulation introduced in the 1980s, and extended by the Wallis Review in 1996. It was obvious that a new review was needed?—?even businessman Stan Wallis himself said as much last year. But Swan resolutely refused to consider such a measure, leaving the opposition an obvious opportunity to win votes, which it has taken by proposing its own inquiry. Even such a simple step as charging banks for the guarantee introduced in 2008 and made permanent in 2011 was too much for Swan.

Since returning to office, Prime Minister Kevin Rudd has gone some distance towards remedying Swan’s total inability to communicate an economic message. It remains to be seen, however, whether he will repair the damage in time

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  1. August 7th, 2013 at 17:51 | #1

    What about one of those charts the software people use to market their products?

    Usually, the the columns are various products – their own and the competitors. The rows are the features they want to highlight.

    So, in this version, the columns would be countries and/or ‘schools’ of economics. The rows would be various economic achievements, such as no-GFC-recession or no hard let down from a housing bubble.

    Any takers?

  2. August 7th, 2013 at 18:38 | #2

    The first thing to be said about the economic policy debate in the lead-up to the election is that we shouldn’t be having one.

    But these lead-ups are the only opportunities to get the parties to take ideas on board, though even these aren’t very good.

  3. Ikonoclast
    August 7th, 2013 at 18:46 | #3

    “At least as regards the medium-term settings of fiscal and monetary policy, it is hard to see any reason for change.” – J.Q.

    The 709,300 people recorded unemployed in June 2013 might disagree with you. As might the unemployed youth suffering their approx. 22.5% unemployment rate. As might the under-employed. I am beginning to think that Hard Keynesianism is functionally scarcely to be differentiated from neoliberalism. These monetary and fiscal settings are not correct. The existence of unemployment above 2% (approx. frictional) is the empirical and social evidence that the policies are wrong or inadequate. To accept that 5% unemployment is successful economic management is to fall for the neoliberal narrative.

    Of course, under the Liberals things would be worse but if anyone thinks Labor have exhibited consistent good economic management (apart from the GFC knee-jerk where they actually got it right) then they don’t understand how macroeconomics should serve all the people and not just upper middle professionals and the top end of town.

    What happened to the JQ of the 1990s who cared about full employment? I guess he abandoned that position and moved right with the Overton window.

  4. Mel
    August 7th, 2013 at 19:05 | #4

    Thanks for a great summary of what has happened, PrQ.

    Swan exudes negativity, pessimism and defeat. What a contrast with his coalition predecessor, Costello, who exuded an arrogant sense of optimism and being in control.

    Swan should have stated and constantly reinforced the message that we are witnessing a test of economic theories, Keynesianism and the expansionary austerity favoured by the Anglo Right. He should have taken every the compare Oz’s performance with the miserable situation in Britain. Thank God he is gone.

  5. kevin1
    August 7th, 2013 at 19:24 | #5

    I am interested to know what JQ’s view is on broadening the GST. I worked in the implementation of that back in 2000 and was one-out amongst my peers in supporting the Democrat-inspired exemptions on equity grounds. But….dynamism is the constant for economists, so of course the general income growth since then means that rich people spend much more on food/health/education in absolute terms. But how do we measure this as a counter-effect to the income-regressive effect of broadening the base?

    I suspect that the revenue boost from reducing the black economy as well as the sales effect – which underpinned the expansion of the welfare state last time – can open up new horizons for a better-resourced welfare and education sectors. currently under threat from “public choice” philosophy. This is a second question about the “regressive effect” of indirect taxes (not to mention the abolition of the state govt. stamp duty, and payroll etc. taxes they were supposed to abolish last time.)

  6. SJ
    August 7th, 2013 at 21:19 | #6

    Swan should have stated and constantly reinforced the message that we are witnessing a test of economic theories, Keynesianism and the expansionary austerity favoured by the Anglo Right. He should have taken every the compare Oz’s performance with the miserable situation in Britain. Thank God he is gone.

    It’s weird, isn’t it. It’s as if they think it’s impolite to say things like that.

    On the other hand, Fairfax started to talk about Murdoch and the NBN, which all of us already knew about, so maybe the gloves are coming off. Good thing. Why be polite to thieves and criminals.

  7. rog
    August 7th, 2013 at 21:38 | #7

    Yes, its weird how the ALP acted in a manner contrary to most of the world thereby avoiding the worse of the collapse yet are almost frightened to capitalise on their achievements. Perhaps they are victim to the ‘born to rule’ nonsense of the LNP.

  8. Ernestine Gross
    August 7th, 2013 at 21:39 | #8

    The GFC didn’t leave Australians untouched. 2007 to 2009 were quite tense years for some businesses and for many people close to retirement. There was general uncertainty, speak worry, in 2008/09 about financial stability and then again with talk about the EU.

    Not all of the ‘stimulus’ money was well directed or spent, even though the reasons are understandable.

    IMHO, the most significant and most clever ‘stimulus’ was the cash payment to individuals with incomes up to a specified limit, as per last tax return. This, I believe was Dr Ken Henry’s idea.

    Even now the federal government debt to GDP ratio is low by international standards. Australians have responded to the GFC by paying down debt a little faster by spending less. They have done so without a directive. However, the private household debt is still large, more so for some than for others.

    Keynesian economics is short term management, as I understand it, and excellent in crisis situations. Of course, if one contrasts ‘Keynesian economics’ with neocon economics (extreme form of neo-liberalism), then yes, it is Keynesian economics which dominates in the realistic policy spectrum. By realistic policy spectrum I mean technologically, natural resource and financially feasible actions that are consistent with the most fundamental institutional parameters to which a society wishes to adher. But in this realistic spectrum, it is progressive taxation (ie increasing the top marginal tax rate), stringent tax collections, public ownership of infrastructure and stringent regulation of the financial securties that can be issued.

    The outsourcing of credit risk assessment to credit rating agencies is not Keynes at all – to the best of my knowledge. It is also not consistent with a competitive economy model. It is neo-con-corporatist – IMHO.

  9. Lt. Fred
    August 7th, 2013 at 22:25 | #9

    Is it not the case that Australia in fact has a real surplus right now? That the gross deficit is less than our GDP growth rate, meaning that the GDP/debt ratio will be lower next year than it is right now? Or have I made an error?

  10. Jim Rose
    August 7th, 2013 at 22:26 | #10

    with his ‘new way’ slogan, Rudd wants to be seen as born again and not remind voters of his previous term as PM. odd slogan, I must say.

  11. August 7th, 2013 at 23:30 | #11

    And now the Libs will cut company taxes. I bet they’ll even argue that it will cause business to boom so much that company tax revenues will increase.

    Actually, it might not be such a bad policy, if they were prepared to increase company taxes in good times, but when good times come they won’t. So gradually a structural deficit gets built.

    The trouble with Keynesian economics is that it is counter intuitive, and even people who know it works can’t quite believe that they should actually spend in tough times.

    I still think that the best possible economic stimulus in Australia would be to increase the dole and minimum wage. Those people will spend every cent – using none of it to pay down their mortgage, because they don’t have any.

  12. August 7th, 2013 at 23:34 | #12

    @Jim Rose

    It is an odd slogan, “New Way”. But given an electorate that irrationally loves Kevin Rudd, and just as irrationally hated Julia Gillard, why should “New Way” not be embraced? Have the Libs decided to stick with “Chuck this mob out”?

  13. August 7th, 2013 at 23:58 | #13

    And Fairfax also pretends this faux Rudd v Murdoch staged fight is about the NBN.

    Bull. The AFR had a piece today (right around the page they had their very large Northropp-Grummann advertisement about how drones will save us from the brown people – seriously!) pretending that there was some kind of hint of a deal.

    They even re-invented Howard complete with quotes.

    Just a tiny mention of what our PMs (Hawke, Keating, Howard, Rudd & Gillard) have ceded of our democracy to Murdoch would have been a nice touch of context.

    This has nothing to do with the NBN in reality, the real game is Murdochratic stranglehold on our media. Murdoch doesn’t care who wins, he’ll get what he wants from both ALP/LNP either way.

  14. Mel
    August 7th, 2013 at 23:58 | #14

    John Brookes:

    The trouble with Keynesian economics is that it is counter intuitive, and even people who know it works can’t quite believe that they should actually spend in tough times.

    Funny you should say that because I think it *is* intuitive.

    If folk have dismal expectations and stop buying, businesses will be forced to lay off staff. Government then needs to pick up the slack. I realise things are more complicated than that but the crude bare bones of Keynesianism sound perfectly logical to me.

    Having said that, economics does my head in.

  15. TerjeP
    August 8th, 2013 at 00:03 | #15

    Rudd should tell us all a few more times how good we have had it. Get Rudd to say it over and over during this campaign. Please!

  16. August 8th, 2013 at 00:04 | #16

    Anybody else suddenly feel the need to hate “Hermes”, their products, and anybody and everybody involved in marketing?

  17. Ernestine Gross
    August 8th, 2013 at 07:06 | #17

    On taxation and “Labor, hiding its light under a bushel”

    There is the increase of the tax free threshhold from about $6000 to about $18000 which I believe is worth remembering as a good thing.

    It is a good thing because it works against the increasing wealth inequality which matters in daily life for a large number of people. It also matters for the sustainability of a market oriented economy. I take it is a given that people do appreciate the good aspects of a market oriented economy.

    I can’t understand why an increase in the top marginal income tax rate isn’t considered an obvious and feasible policy measure to assist in both, reducing government debt and reducing the inequality in wealth. Or, as John Brooks suggests, use the additioal revenue to increase unemployment benefit. It depends on the circumstances.

    ‘Stimulus’ versus ‘austerity’ are words which, IMHO, are not useful for practical purposes. As is quite clear, the ‘stimulus’ in the USA was northing but a rescue package for those who caused the GFC while many of the victims of the GFC are still in a state ‘austerity’, defined as hardship.

    Reflecting again on the topic of this thread, it seems to me the only major policy failure since 2007 is the mining tax. The government was outwitted by a few multinational mining companies in a situation of extremely aggressive and expensive and extensive advertising campaigns by the miners. Rio Tinto has a hide, if I may say. They made massive losses on some of their international deals but winge about a super profit resource rent tax in Australia.

    If the cigarette tax hikes are achieving the stated goal of reducing smoking, then the budget aim of this policy is going to fail. There is a plan B missing. For example a tax on processed food known to cause health problems, including bodies growing too big. Imagine what happens if heavy smokers quit but reach for fetty chips – every 20 minutes of so? Not sure their health will improve.

  18. Ikonoclast
    August 8th, 2013 at 08:02 | #18

    @Ernestine Gross

    I agree with your advocated policies, namely;

    1. progressive taxation (ie increasing the top marginal tax rate);
    2. stringent tax collections;
    3. public ownership of infrastructure; and
    4. stringent regulation of the financial securties that can be issued.

    Following these policies would go a long way to repairing the broken parts of our economy and providing equitable outcomes. Recession relieving measures do have to be target directly to the poor and unemployed who need assistance and not channeled through banks with policies like Q.E. and rescues for failed enterprises such as happened in the US.

    We have to remember the poor and unemployed in Australia who are in a permanent recession right now. As I have pointed out previously our unemployed and under-employed number more than the population of Adelaide (well over 1 million people). Would we tolerate that situation if it was all in one city? The answer is no. Claims that current policy settings are OK are totally fallacious and unacceptable when over 1 million working age Australians and their families have been left behind.

  19. kevin1
    August 8th, 2013 at 08:44 | #19

    For example a tax on processed food known to cause health problems, including bodies growing too big. Imagine what happens if heavy smokers quit but reach for fetty chips – every 20 minutes of so? Not sure their health will improve.

    Has this been done anywhere else? Do we know of the consequences? The packaged food industry would have to be one of the most dynamic and market-oriented around, so strategic positioning around regulatory border issues could not only undermine the objective but make govt regulation look foolish.

    Not to mention the inevitable well-financed political furore. In the cartoon context of popular political commentary, where an “oppression by govt ” theme is fed by channelling people’s vague angst about life, the regulatory big stick – such as tax – must be exercised with enormous care or it is positively dangerous to the authority of government.

    Rather than tax, behavioural change through health promotion and targeted access limitations (eg. at schools, upgrading the quality of food for people in vulnerable situations such as fulltime care homes) sounds like a safer bet and maybe more successful.

    No surprise if less smoking leads to other indulgences but I’m guessing the substitution effect has less addictive consequences and drops off eventually.

  20. John Quiggin
    August 8th, 2013 at 09:22 | #20

    @TerjeP

    Rudd should tell us all a few more times how good we have had it. Get Rudd to say it over and over during this campaign. Please!

    Because, even though it’s true, people have been fooled into believing they are “doing it tough”, and your side of politics can only win on the basis of lies.

  21. TerjeP
    August 8th, 2013 at 09:43 | #21

    John – I was just offering a political tip. But it would be a sweet irony if Rudd lost after bleating about what a great job Labor had done. Do you recall the giant billboards that the ALP put up in 2007 with a picture of Howard and quoting him saying “Working families in Australia have never been better off”. Obviously the punters don’t like hearing it whoever is PM. But by all means give the PM advice to the contrary. Encourage him to hang himself politically if that is your want.

  22. Fran Barlow
    August 8th, 2013 at 10:49 | #22

    @John Quiggin

    Because, even though it’s true, people have been fooled into believing they are “doing it tough”, and your side of politics can only win on the basis of lies.

    Very much so. One should choose one’s words carefully, because “families are doing it tough due to cost of living pressures” is not so much a meme as a motherhood statement. Populism rules OK!

    The better appoach is the “glass half full” played against “glass almost empty”. There certainly are families (and singles!) doing it tough and they deserve our support. On the other hand, pretending that we are on the verge of ruin is not only a nasty self-serving lie but implies that we have no choice to ignore those families and singles who are doing it tough. Who but a political swindler would argue in this way? Mr Abbott needs to explain to those families and singles who are doing it tough why families and singles who are not should be looked after first. He needs to explain to everyone why he is trashing confidence in this country’s economy without foundation, and putting at risk the livelihoods of families and singles who really are doing it tough.

    That’s what I’d have him say, were I his spin doctor.

  23. TerjeP
    August 8th, 2013 at 13:18 | #23

    I should also say that whilst I will be preferencing Liberals over Labor this election that does not make the Liberals “my side”. I preferenced Labor over Liberal in 2004. And in my view the Liberals have loads of crappy policies. But you seem to take the view that “if you’re not with us you’re against us”. Realistically we are on the same side on a number of issues.

  24. may
    August 8th, 2013 at 13:21 | #24

    why am i being barred

  25. sdfc
    August 8th, 2013 at 13:35 | #25

    John

    people have been fooled into believing they are “doing it tough”, and your side of politics can only win on the basis of lies.

    The household sector loaded up on debt during the pre-GFC boom, now the second boom in national income is over the hangover is starting to bite.

  26. may
    August 8th, 2013 at 13:38 | #26

    try again.
    at Megan.
    as well in todays fin.

    a piece where irons is promising a new hospital in the west.

    and the coalition says we’re broke.

    the medical proffessionals are saying it is unneccesary and the money could be better spent.

    this reminds me of the last election when abbot tried to bribe an independent from Tassie with lots of money for a local hospital.
    the independent said it was over the top and refused.
    abbot was really pissed off.

    as for mudoch?

    it’s the claytons australian.

    “the news you’re getting when you’re not getting the news”.

  27. may
    August 8th, 2013 at 13:55 | #27

    i wonder what it (the “australian”)would would make of abbots line from a while back,that goes,as far as i remember,

    “don’t believe anything i say”

    ?

  28. may
    August 8th, 2013 at 14:00 | #28

    i mean

    if it were rudd?

  29. Jim Rose
    August 8th, 2013 at 16:52 | #29

    on fiscal policy under rudd 1.0, reminding voters of the pink bats may not win many votes.

  30. NathanA
    August 8th, 2013 at 17:54 | #30

    Well said FB. There are people doing it tough, but there are less of those than could be if the Government didn’t make the decisions that it did. The trouble is the ever-present inference in the right wing media that you (the reader) are doing it tougher than you should, because the Government is spending your money on someone else. Of course, that someone else isn’t a person getting a tax break to drive a fancy car around in circles, which was actually the case not long ago.

  31. rog
    August 8th, 2013 at 18:00 | #31

    @Jim Rose The “pink batts” argument was misleading and untruthful and to have it recycled, with bad spelling, tiresome.

  32. Fran Barlow
    August 8th, 2013 at 18:40 | #32

    @jimrose

    reminding voters of the pink batts (sic) {HIP} may not win many votes.

    It just might, and if it doesn’t, then it nevertheless should. One can argue persuasively that the Home Insulation Program was, dollar for dollar, one of the best value Federal spends in quite some time.

    People got their homes insulated, reducing their bills, and got a follow up home safety check which in many cases resulted in safer homes. In addition, the need for a number of network upgrades covering those high demand times was reduced. It’s quite likely that these savings will substantially exceed the cost of the program on a per household basis by 2020 and then continue to save them money.

    It also seems clear that the program was not less safe than comparable programs run privately, and may well have had a better per installation record.

    And of course, it efficiently targeted the employment market for those most unable to resist a downturn in the economy, when a downturn was most likely.

    Really, the Murdoch press made a fuss, for obvious reasons, but anyone who benefited from this program — and that would be a great many — ought to be predisposed to support its authors, even if the PM at the time, to his great discredit, lost his nerve.

  33. August 8th, 2013 at 21:47 | #33

    Good point Fran. The pink batt program was a good idea, and mainly benefited us. I’ve always found it odd that the government had to take the blame for some greedy shonky businesses.

  34. Fran Barlow
    August 8th, 2013 at 21:53 | #34

    @John Brookes

    I’ve always found it odd that the government had to take the blame for some greedy shonky businesses.

    I don’t find it odd at all. Part of the paradigm the regime shares with its immediate rival is that small business is good, by default, and obviously, the Murdochracy won’t argue the toss on that.

    The ALP is utterly craven and cowardly, and itself as inclined to populism as the LNP. That has been the most consistent theme in its undoing.

  35. rog
    August 8th, 2013 at 22:37 | #35

    @John Brookes “Pink batts” is a deliberate slight; insulation can be foil, loose fill, fibre rolls to name a few. As a colour pink is rarely used, most batts are yellow, but the inference of girly pink was used to diminish. Used with success too.

  36. Ikonoclast
    August 9th, 2013 at 05:54 | #36

    @Fran Barlow

    “The ALP is utterly craven and cowardly, and itself as inclined to populism as the LNP. That has been the most consistent theme in its undoing.” Fran Barlow.

    Very true, Fran. I would have liked to see the ALP with the guts and integrity to attack corporate capitalists and bring them down when necessary. For example, Rupert Murdooch, Gina Reinhart, Clive Palmer and a few others should have had all their Australian assets nationalised or broken up byanti-monopoly legislation. But Labor are too spineless as you say.

  37. Ernestine Gross
    August 9th, 2013 at 09:26 | #37

    kevin1 @19. Don’t worry about the worries of The Hollowmen – its only a satire.

    Neither people nor public servants nor governments – at least in Australia – are as generically paranoid and superficial as portrayed in this satire.

  38. Tim Macknay
    August 9th, 2013 at 11:55 | #38

    The pink batt program was a good idea, and mainly benefited us. I’ve always found it odd that the government had to take the blame for some greedy shonky businesses.

    Yes, that was an incredibly counterproductive tactic. Although, contra Fran, I think it had less to do with some belief in the sanctity of small business than it did with Rudd deciding to channel his new buddy Beattie when he should have been aping Howard.

    Howard would never have taken the blame for those deaths – he would have declared war on dodgy insulation installers, and people would have lapped it up.

  39. may
    August 9th, 2013 at 12:08 | #39

    yers.
    of course the ABC “the election in 90 seconds” is not helping.

    the more goes on the more it’s looking for the coalition like the “play dead” and “go all quiet” plan used by the state coalition here in the west.

    they have had years to give me a policy list i can vote for and there has been nothing but duplitious nagging and “be afraid,be very afraid”.

    over here?

    suddenly after years of booom,the state is broke.
    people are more than a little bit peeved that the government we got is not the government that was voted in.

    conservative economic expertese?(sic?)?

    don’t give me the pip.

    if this is what we can look forward to on the federal level then it really will be

    “be afraid, be very afraid”.

    and the run around abbot mob is trying to pull over a series of debates is staring to look a leetle scaredy pants(lycra).

    after all,it’s one thing to knock some one over after going hell for leather on the old “lance corporate” bike and then abuse them for being in your way
    and taking care on what is a public bike path and not hitting any one at all.

    i’m getting a bit convoluted here, so it just seems in the light of a slowdown in the inequality stakes,the high flyers are fighting not so much for their life,as for their lifestyle.

    notice how insider trading is not a non issue?
    for the coalition ,it will be.(just an opinion).

  40. may
    August 9th, 2013 at 12:14 | #40

    and abbot said he didn’t talk about the NBN to mudoch,so what did he talk about?

  41. kevin1
    August 9th, 2013 at 13:11 | #41

    @Ernestine Gross
    You’re confusing me with someone else.

  42. Hermit
    August 9th, 2013 at 13:21 | #42

    I wonder if PM Abbott will spend the first six months of government on payback and vendettas. This will have two functions, as a diversion from policy inaction and a reward to supporters. For that six months or so the codgers who wanted to scrap the tax and ditch the witch will be cock-a-hoop. Rupert will not only see Foxtel’s niche become more secure but I suspect the pesky ABC will be efficiency dividended.

    However I feel sorry for those who will feel betrayed when things don’t pick up the way they hope. For example retrenched workers interviewed on voting intentions seem genuinely convinced the economy will suddenly go back into rehiring mode. As if the downturn is some kind of socialist plot that is easily removed. That’s why I think Australia will become a less pleasant place a year from now.

  43. Ikonoclast
    August 9th, 2013 at 15:13 | #43

    @Hermit

    There is no doubt Australia will become a less pleasant place under Abbott. Just as Queensland has become a less pleasant place under Newman. Under Abbott, I predict 8% unemployment by the end of his first term. The world economy and the Australian economy are both fighting contraction so under the swingeing cuts which Abbott will bring in the economy will go into recession even further. There is no capacity for another borrowing binge. People are still paying down the last private borrowing binge racked up under Howard. Therefore, there will be no stimulus to the economy from govt. spending, nor from borrowing, nor from wages. This triple whammy will send the economy into a tail spin. I just hope that that portion of the lower 95% who are foolish enough to vote for Abbott lose their jobs first. That would be fitting.

  44. Ron E Joggles
    August 9th, 2013 at 17:40 | #44

    Ikonoclast :
    @Fran Barlow
    For example, Rupert Murdooch, Gina Reinhart, Clive Palmer and a few others should have had all their Australian assets nationalised or broken up byanti-monopoly legislation. But Labor are too spineless as you say.

    Surely you jest! What is the point of advocating extreme action that no Australian govt could ever contemplate? I read this blog for the rational and informed discussion of economics and politics, and generally find myself in agreement with you and Ms Barlow. But I think that Labor has a genuine chance of retaining govt, and I can’t understand why anyone who says they oppose Abbott would advocate radical positions which can only increase the likelihood of an Abbott victory – and for what? – the Pyrrhic victory of holding fast to a morally superior position? Rudd can’t afford this sort of self-indulgence – he has to try to win.

  45. Lachlan Ridge
    August 9th, 2013 at 18:21 | #45

    @Ikonoclast

    As one of those 709,300 unemployed I can tell you straight up that an Abbott government would be a disaster for me. All market based solutions to managing society – from health care, housing and and labour market management (including the commodification, and thus exclusion, of education) – have contributed to me living in my car. Abbott would be particularly nasty, but Rudd wouldn’t be much better. Primarily because middle Australia are oblivious to, insensate and incapable of conceptualising the reality of poverty in an Australian urban winter in 2013.

    As an example, because of a lack of warm showers and cold showering exposing you to the flu, your faecal matter tends to dry and cake around your anus. This does not accelerate forward opportunities in grasping emerging openings in labour markets, as they say down at the Job Network Nor does it assist in normative social engagement or enhance desire to be socially useful or constructive. But hey, no ones offering free showers anymore!

    What is needed is significant income boost to people without adequate employment. Your best option is to do it through state managed transfer payments before we increasingly rely on informal means of transferring wealth, such as kicking the front doors in on houses in nice suburbs. This is a far more productive use of our resources than being a vehicle for transferring state funds to corporations like the Job Network, where Therese Rein made her millions, or to be belittled and ritually humiliated by kiddy-fiddling churches passing themselves off as charities.

    The growing numbers of homeless aren’t all dysfunctional. Housing is so unaffordable;e that many reasonable people are now living out of cars. People will only remain marginalised for so long before they act, and there are more homeless than there are Police in NSW now.

    🙂

    Have a nice f*cking day!

  46. Ikonoclast
    August 9th, 2013 at 19:00 | #46

    @Lachlan Ridge

    “Primarily because middle Australia are oblivious to, insensate and incapable of conceptualising the reality of poverty in an Australian urban winter in 2013.” – Lachlan Ridge.

    I don’t want people to lose jobs, even those foolish enough to vote for the LNP and Abbott. Middle Australia is indeed currently insensitive to the real poverty in Australia. This will change as the middle Australia itself is also dragged down into poverty. Just as the US middle class is collapsing, the Australian middle class will collapse too if current policies go unchecked. I just wonder how long it will take the middle class to realise its danger.

    The EU is falling into a Great Depression. Several countries are already there. For example, Greece has 28% unemployment and 65% youth unemployment. Australia is headed the same way unless the dysfunctional policies of Lib-Labs are jettisoned. Austerity policies will lead to an eceonomic depression.

    I want to see more public spending and more government deficit spending. I too know that assisting the unenployed and poor actually improves the economy and cuts suffering and crime.

    Stop listening to all standard economists, from the neoconservatives to the Hard Keynesians. None of them have a clue. They are all in favour of keeping a reserve army of unemployed to control inflation and discipline wage claims. They are the servants and apologists of the rich. Pay attention to MMT (Modern Monetary Theory) as the only theory outside Marxism that has any idea of what is going on in modern macroeconomics.

  47. August 9th, 2013 at 21:38 | #47

    @Lachlan Ridge
    If things don’t pick up in the next term of government I’ll be forming the “Newstart” party. We’ll be looking for the votes of the unemployed. Our policy will be to redirect money to people who will spend it, and generally reducing inequality. 457 visas will be strictly policed. The tax and social security systems will be greatly simplified. Rupert Murdoch will be dead, and so won’t be able to campaign against us.

    We may not get many reps seats, but we should get a few in the senate.

  48. August 9th, 2013 at 22:09 | #48

    Labor’s Neo-Con “NAPLAN” drive to Charter Schools is also doomed to failure.

    To be fair, it is also the policy of the LNP as we are seeing in Queensland.

    http://garyrubinstein.teachforus.org/2013/08/09/driven-by-data/

  49. TerjeP
    August 9th, 2013 at 22:41 | #49

    @Lachlan Ridge

    Why are you unemployed? Besides the personal hygiene issue.

  50. August 9th, 2013 at 23:18 | #50

    @TerjeP

    That pretty much sums up you libertarians.

    He describes effect and you see cause.

    I heard Dick Johnson on the ABC today, talking about the demise of Australian car manufacturing, saying “we just priced ourselves out of the market”.

    Nobody asked him what he envisaged an Australian car manufacturing industry would look like at, say, minimum wages.

    And as usual, nobody pointed out that Toyota appears to be doing quite well with vastly less subsidies than Holden and Ford and while still paying their workers decent wages.

  51. Tim Macknay
    August 10th, 2013 at 01:16 | #51

    @John Brookes

    Rupert Murdoch will be dead, and so won’t be able to campaign against us

    I wouldn’t count on it. His mother made it past 100, as I recall.

  52. Ikonoclast
    August 10th, 2013 at 07:23 | #52

    @TerjeP

    “Total job vacancies in May 2013 were 138,700, a decrease of 9% from February 2013.” – ABS.

    “Unemployed persons in June 2013 were 701,600.” – ABS.

    These numbers are only one month apart. Pray tell me TerjeP how 701,600 persons can all find jobs when only 138,700 jobs are available?

    Even if all these job searchers were perfectly trained and perfectly presentable and even if, just suppose, frictional employment could be magicked away, that would leave 562,900 job seekers unable to obtain jobs. This being the, you must be forced to concede (if you have a shred of intellectual honesty) that not personal failure but systemic economic failure is the cause of all that unemployment.

    So whilst personal failure is a jibe some like to use to increase their own feelings of worth it is not any kind of explanation for a phenomenon of this magnitude. In most cases, personal “failure” is indeed personal misfortune and/or the impact of systemic failure. The fact that some like to sneer at the unfortunate says nothing about the real phenomena of misfortune and the impact of systemic problems on individuals.

    If there’s a lot of influenza going around do you blame the person who contracts influenza? Is it their fault for being very old or very young or young adult etc.? The cohort most at risk will depend on the strain of flu. Similarly, if there is a lot of unemployment going around do you blame the unemployed or do you look deeper for the causes of unemployment in the system?

    But I waste my time. Libertarians are lost causes lacking the capacity for both empathy and empirical analysis.

  53. TerjeP
    August 10th, 2013 at 08:35 | #53

    This being the, you must be forced to concede (if you have a shred of intellectual honesty) that not personal failure but systemic economic failure is the cause of all that unemployment.

    Yes bad policy is a big factor. But it is personal circumstance that typically determines who ends up unemployed. So it is perfectly reasonable to inquire into those circumstances if you seriously want to understand the phenomena.

  54. Fran Barlow
    August 10th, 2013 at 08:47 | #54

    @TerjeP

    So it is perfectly reasonable to inquire into those circumstances if you seriously want to understand the phenomena.

    {phenomenon (singular)}

    It’s perfectly reasonable, but from the point of view of public policy, it’s not salient, and adducing it is at best a form of misdirection, and baleful in its consequences, by implying that unemployment generally falls on a line between personal lifestyle choice and cultural deficit or anomie. Thise serves to mystify processes that should be clear, and to buttress inequity.

    These consequences may not be your intent, yet it seems to me that as a person of at least typical cognitive accomplishment, you ought to have been able to reason to this point, allowinf that nobody had already made this point to you. That you appear not to have reflected on this recommends self-serving cognitive dissonance, IMO.

  55. Fran Barlow
    August 10th, 2013 at 08:48 | #55

    {allowing}

  56. Jim Rose
    August 10th, 2013 at 09:54 | #56

    TerjeP :

    This being the, you must be forced to concede (if you have a shred of intellectual honesty) that not personal failure but systemic economic failure is the cause of all that unemployment.

    Yes bad policy is a big factor. But it is personal circumstance that typically determines who ends up unemployed. So it is perfectly reasonable to inquire into those circumstances if you seriously want to understand the phenomena.

    you are not distingishing between a layoff and a dismissal.

  57. sunshine
    August 10th, 2013 at 10:40 | #57

    Lots of good reading here – delaying me from getting on with some outside jobs on one of the very few recent sunny days in a very wet and muddy Melbourne August.

    Rudds post GFC article in the Monthly blew me away – I couldnt believe a sitting PM would dare to say such things . Then I found out Terise Rein has over 100 million from Job Network Member companies and became very suspicious.

    I agree that the mining tax was the one that got away ,and that ‘the market ‘ should have shared the blame for pink batt deaths .

    Iko is correct that if all the unemployed lived in the one place it would not be tolerated -just as if all the smoking related deaths happened in the one place and time each year it would be stopped . Also if abbitoirs had glass walls…….or if terrorist victims didnt make such spectacular news ?

    John Brookes -Having been oficially unemployed lots myself , Ive often thought there must be an opportunity for them to mobilise politically -given the huge number .A problem may be that most will be reluctant to identify as such because they think of themselves as only temporarily unemployed .A bit like how the poor in the USA have come to see themselves as rich people who are just a bit down on their luck. It has puzzled me how villifing the unemployed is a national sport when there are so many of them.

    Some of my unemployment has been voluntary in a sense. As I come from a secure family background (and can be happy with a simple life) I have had that choice ;I have persued other things such as further study , activism ,drugs, etc . In other ways tho it has not been voluntary -in some important ways I am not suited to the world of paid work . I think (luckily) there are all types of people ,and society can only be organised one way at a time, so some will be better suited to fit in and take advantage of that than others . We should not punish the others who dont fit so easily .

  58. Ikonoclast
    August 10th, 2013 at 13:22 | #58

    @TerjeP

    “But it is personal circumstance that typically determines who ends up unemployed…”

    Yes, and here are some of the personal circumstances in no particular order;

    a. Grew up in a poor or underclass family. Few opportunities and poor role models.
    b. Suffered a family or personal tragedy which ruined life chances and opportunities.
    c. Grew up in an area of few opportunities.
    d. Had to move to a new area to find opportunities and thus struggle without familiar support.
    e. Happened to work in a company which went bust.
    f. Skills rendered obsolete by job changes.
    g. Suffered serious or chronic illness.

    These are seven “no fault” possibilities as to why the 7 out of 8 will be out-competed by the 1 out of 8 when there are 8 unemployed for every job vacancy.

    Why are you looking for personal fault when it is a minor determinant at best? Even in cases where people fail on the counts of personal presentation and motivation there are often (thought not always) mitigating circumstances. So personal fault is a vanishingly small cause of the problem in the aggregate.

    Personal fault or lack of personal effort is an issue when we look at matter from the other end; from the personal level. This illustates in a way the problem of the fallacy of composition. Lack of personal effort can and will function to hold a person back. The converse is that making good personal efforts might help one find work but that if all or even many jobseekers make at least equal good efforts then there is still far from any guarantee of success.

    Perhaps you have had a charmed life TerjeP or perhaps you paddled hard once and got on a good wave like a surfer. Standout success takes three things.* These are brains (or brawn), hard work and a good dose of luck. The brains or brawn you inherit, the luck is just that so at best you can take 1/3 credit if a success and that is the cedit for the hard work. However, capacity for hard work is probably partly inherited and partly inculcated by upbringing and training so even a hard worker should be humble about that gift.

    * Note: Actually certain kinds of standout success in our system (capitalism) come from systematic cheating, aggression, selfishness and exploitation of others.

  59. Donald Oats
    August 10th, 2013 at 14:27 | #59

    Wayne Swan, and the ALP seniors, kept banging on about getting to surplus as though it was the most important objective. Given the rather obvious—at the time—conditions under change, it seemed doubly stupid to make a commitment that was unnecessary politically, and then to repeatedly make that commitment in the face a soon to decline revenue base. If, as you say, Pr Q, they had put more emphasis on the uniquely Australian success at avoiding a crashing recession in the wake of the GFC, they could have explained it in terms of rejecting austerity measures in favour of strong stimulus of the economy through the eminently practical methods handouts, government work programs, etc. I too wonder at what possessed the ALP, and Wayne Swan in particular, to bang on about achieving a surplus in the wake of one of the worst crunches this side of the Great Depression. European countries are still dealing with massive socially dislocative effects of the GFC, something Australia has simply not suffered. In 1990/1991 we had a serious economic decline, a recession, and that was a far grimmer time for Australia than the last few years have been. Same goes for 1982/1983.

    Labor have enacted many well justified policies and yet their public proclamations are all too often about picking fights they don’t need to, on issues that are largely captives to fate, or on things that are right up the alley of their opposition. Weird at best.

    Right now though, the opposition is making a big deal about four deaths during the installation of the insulation bats. Quite apart from the fact that those deaths were the direct responsibility of private enterprises, especially those which should have been providing their employees with the necessary skills to work in potentially dangerous rooftop and ceiling environments, why isn’t Labor explaining the benefits of the scheme? Labor should reject outright any claim that they are in any meaningful way responsible for deaths that happened on the watch of private contractors, especially where the contractors failed to provide the necessary training to new staff. Greed for a ride on the gravy train is what one contractor admitted to in an interview on TV (although not in those precise words). Under those circumstances, the opposition’s sabre rattling should not be getting any traction—unless Labor lets it. Why not counter the Liberal attack with WMD, AWB (in which kickbacks were paid to a government with which we were at war), “Interest rates are always lower under a Liberal Government”, and any number of other ridiculous claims made by the opposition. Kick the sand right back into the opposition’s face. A certain amount of sarcasm wouldn’t hurt the delivery, either.

  60. Ikonoclast
    August 10th, 2013 at 17:39 | #60

    @Donald Oats

    I agree on all points. It is hard to understand this surplus obsession. A Fed govt. budget deficit or surplus is meaningless in itself and only gains meaning in relation to the real economy. Putting it crudely, if the economy is in recession a budget deficit makes sense. If the economy is overheating, a budget surplus (removing spending stimulus) makes sense.

    This whole public discourse about the govt budget position has become absurd. The position is promoted by neocons that surpluses (withdrawing govt spending impetus) are always beneficial. This is as absurd as saying losing weight is always beneficial. Actually, it’s not beneficial if you are underweight and it’s not beneficial if you are a normal weight range child or teenager who is still growing.

    Professor John Quiggin’s stated Hard Keynesian position that budgets should be balanced over the cycle is with all due respect at best ambiguous and “in code” or at worst nonsensical. It is unfortunate that John Q. runs this line. It means he is conceding the technical framing of the debate to the other side (the neocons). It means he is debating using their discourse “hot words” and “hot issues”. It mean he is accepting their weasel words and weasel definitions in an attempt to sound “fiscally responsible” which of course is just another weasel phrase from the neocons.

    When you unpack and question “balanced over the cycle” what you really find he means is “balanced over the cycle but allowing for money supply growth consisent with real economy growth”. In other words in a growihg economy this means running on average net deficits (to allow for the new money creation). Now economists and people in the know might realise this. But the general public, who by and large know nothing about fiat money creation and modern monetary operations, do not know this, They will interpret “balanced over the cycle” very literally to mean balanced and nothing more.

    Conceding the above debating point to the neocon blusterers is a tactical mistake. It should be highlighted that net money creation must occur over the cycles as the economy grows or otherwise there would be a money supply crisis and/or a credit squeeze. Highlighting this very real point would begin to educate the public that government fiat money creation is a normal and positively beneficial operation in a growing economy. This would then slowly begin to remove the reflex and very erroneous judgement that all government money creation is bad.

    At the same time, it should be pointed out that debt money creation by banks (a lending binge) can be inflationary in its own right and needs to controlled at least as strongly as government fiat money creation. It should be further pointed out that fiat money creation might not be inflationary whilst the economy has un-utilised capacity (labour and plant). Thus it would make sense to limit debt money creation and the asset inflation it causes and concomittantly increase fiat money creation in an attempt to solve unemployment via direct spending and job programs. Inflation could be kept under watch in that program and the band even relaxed a little. I would rather see 5% inflation and 2% unemployment than the reverse of 2% inflation and 5% unemployment. Anyone with economic good sense and concern for the poor and unemployed would also rather see that IMO.

  61. TerjeP
    August 10th, 2013 at 19:53 | #61

    Why are you looking for personal fault when it is a minor determinant at best? Even in cases where people fail on the counts of personal presentation and motivation there are often (thought not always) mitigating circumstances. So personal fault is a vanishingly small cause of the problem in the aggregate.

    This seems to be some sort of stitch up. Lachlan nominated access to hygiene as a barrier to getting a job. Specifically he cited difficulty getting access to shower facilities. I asked what other factors he felt were relevant. To presume that I am looking for “personal fault” seems a little disingenuous when what I asked about were barriers to entry.

  62. Ikonoclast
    August 10th, 2013 at 20:05 | #62

    @TerjeP

    Fair enough. Actually, I think reasonable living quarters are necessary for anyone attempting to get a job. In other words, you need secure lodgings, a bedroom and bed, a shower, a toilet, a small living area and a kitchen or kitchenette. And enough for food, clothes and fares and incidentals. In other words a living benefit.

  63. August 10th, 2013 at 20:52 | #63

    @TerjeP

    If you were interested in factors contributing to someone’s unemployment (that is, the reason they are unable to get a new job – not the reason they lost their old job), specifically barriers to “entry”, perhaps it could have been worded a little bit better than:

    Why are you unemployed? Besides the personal hygiene issue.

    One instant solution to “unemployment” would be to give the “unemployed” 2 weeks dole and an ABN and decree that henceforth they are all self-employed and free to engage with the market as they wish. They may be poor, hungry, sick and homeless but they will never again be “unemployed”!

  64. TerjeP
    August 10th, 2013 at 21:56 | #64

    Megan – the personal hygiene issue was the one that Lachlan had made much mention of. I accept that without this context my remark perhaps sounds a little abrasive but it was not meant that way.

  65. TerjeP
    August 10th, 2013 at 22:00 | #65

    Fran – completely off topic but your past interest in sortition and alternate governance models leads me to believe that you would enjoy the following talk in favour of a political system free of elections (ie the one party state in China). I found it very stimulating. I can think of counter arguments but they don’t diminish the joy of hearing this guy argue his position powerfully.

    http://youtu.be/s0YjL9rZyR0

  66. Ernestine Gross
    August 10th, 2013 at 22:48 | #66

    Ikonoclast, your theories (you have two) are mutually exclusive.
    1. You maintain recognition of the finiteness of resources, including the environment, is crucial and you predict rather dire states for much of humanity due to the exhaustion resources.
    2. You promote unbounded fiat money expansion to counteract unemployment by ‘growing the economy’.

    Fiat money expansion means resources are used faster. Take this argument to the limit and you’ll get a nice contradiction of your theory numbered 1.

  67. SJ
    August 10th, 2013 at 23:19 | #67

    Ernestine, to say that Ikonoclast wants “unbounded money expansion” is a gross misrepresentation.

    He says:

    At the same time, it should be pointed out that debt money creation by banks (a lending binge) can be inflationary in its own right and needs to controlled at least as strongly as government fiat money creation. It should be further pointed out that fiat money creation might not be inflationary whilst the economy has un-utilised capacity (labour and plant). Thus it would make sense to limit debt money creation and the asset inflation it causes and concomittantly increase fiat money creation in an attempt to solve unemployment via direct spending and job programs. Inflation could be kept under watch in that program and the band even relaxed a little. I would rather see 5% inflation and 2% unemployment than the reverse of 2% inflation and 5% unemployment. Anyone with economic good sense and concern for the poor and unemployed would also rather see that IMO.

    Your argument is nonexistent, I would say.

  68. Ikonoclast
    August 11th, 2013 at 07:04 | #68

    @Ernestine Gross

    There is a contradiction in that and I am well aware of it. My two theories (count them, two!) do come into eventual conflict. Your criticism of me on this score is a bit like telling the doctor you want no treatment for anything because eventually you will die. Yet our nature (animal spirits) constrains us to deal with problems immediately and existentially despite doom being inevitable eventually (personal death, species extinction, sun expiration, heat death of the universe).

    Resources are indeed limited; both input resources and the “waste absorption” and recycling services provided by the biosphere. Some resources exist as a stock on any human time scale (coal, oil) and some exist as a flow (solar power, wind).

    As SJ pointed out, saying I want unbounded money expansion is a gross exaggeration. I am saying while our economy is growing we need more money expansion and more targeted government spending than occurs currently under neo-conservative and hard Keynesian prescriptions.

    We do need to transition to a steady state economy. This transition needs to be done in an organized state directed fashion utilising all our human resources i.e. solving unemployment on the way.

    Are you working on steady state economics? Can we expect to see Ernestine Gross mentioned along with the great luminaries of the past as in Adam Smith, Karl Marx, John M. Keynes and Ernestine Gross?

    Did you bother to read my post (some time ago) on ubiquitous recources? It was largely ignored here but it outlined very broadly possibilities for transitioning to an economy based on the ubiquitous and essentially inexaustible crustal (elemental) resources of Hydrogen, Oxygen, Carbon, Nitrogen, Silicon, Aluminum, Iron, Calcium, Sodium, Potassium, and Magnesium plus of course solar and wind power. It recognised the need to transition in many cases from metal fabrication and possibly even from metal electrics and electronics to carbon, resinous and silicon fabrication and carbon and silicon electronics. It’s a third idea (count them, three!) and as I have not seen it elsewhere in express, synthesised form it might even have some originality about it.

    Of course, even this kind of economy will have limits and must eventually run in a steady state. Now where is your theory for getting us to that steady state economy? Humanity awaits and needs such a magnum opus. A foward thinking economist would be attempting to solve that precise problem. We need to “fight” not the intellectual wars of the past but the intellectual battle for the future.

  69. Hermit
    August 11th, 2013 at 10:54 | #69

    While Ikonoclast dreams of a steady state economy Joe Public wants a return to the Golden Age of Growth. This is how it works..you get leave school, do a course then get a service industry job, get married, get a mortgage on a house in the suburbs, have kids then they repeat the cycle. There’s always more people and more stuff to buy. That nice man Mr Abbott will make sure it stays that way.

  70. Jim Rose
    August 11th, 2013 at 12:52 | #70

    interesting contrast today. Rudd would have been up at 4 to swat for the leaders debate so he could score some debate points.

    abbott ran in the city to the surf and then made some minor policy annoucements with turnbull. abbott projected calm and confidence. also showed he had a life outside of politics.

  71. Ikonoclast
    August 11th, 2013 at 12:59 | #71

    @Jim Rose

    “Rudd would have been up at 4 to swat for the leaders debate.” That is an assumption. Actually Rudd was dumping a dud candidate or two. Abbott ran a race for a photo opp. All standard politics really.

    Actually, Abbott has shown us on numerous occasions he has a life outside the intellectual life… entirely outside it in fact.

  72. Will
    August 11th, 2013 at 13:21 | #72

    @ JR

    It’s Sunday! Was Abbott at church reading a sermon on how wealthy white straight Catholic males are the most oppressed minority in Australian history again?

  73. Ernestine Gross
    August 11th, 2013 at 15:19 | #73

    SJ and Ikonoclast

    1. True, in the specific post from which you quote, SJ, Ikonoclast did not say unbounded fiat money expansion. (I didn’t link to the specific post.)

    2. Ikonoclast acknowledges he has two theories (one resource economics and MMT) and he acknowledges these two eventually contradict each other (ie in the limit).

    3. The point in Ikonoclasts post in question, which I did not acknowledge but which should be acknowledged is that he does talk about both, government and private banking sector monetary expansions. (His argument that “government fiat money creation is a normal and positively beneficial operation in a growing economy” is ca 1960 Monetarist.)

    4. Ikonoclast, no I am not talking about ‘steady state economics’ because this approach (growth theory) also does not take into account the finiteness of the life of earth as we know it and hence the finiteness of resources, as we know them..

    5. A lot happened in economics since A. Smith, K. Marx, J.M. Keynes, particularly since the 1950s. Unfortunately, the great leap forward to the past (‘neo-liberalism’) together with macro-economic statistics still dominate public discourse. (This makes it a little difficult to find the right box to put me in, true?)

  74. Ikonoclast
    August 11th, 2013 at 19:04 | #74

    @Ernestine Gross

    Very true, a lot has happened in economics since A. Smith, K. Marx, J.M. Keynes. A key thing that happened was the end of the Bretton Woods System in 1971 and the subsquent adoption of floating exchange rates (over a period) by most countries. There is a new economics that analyses this reality (MMT) and then there is the rest of bourgeois economics which continues to ignore the empirical realities of the new system.

  75. Tom Piccolo
    August 12th, 2013 at 13:36 | #75

    Labor has form at throwing its economic credentials away. Own Harries wrote in 2007 that “… after the Labor Party had done the hard, ground-breaking work under Hawke and Keating, it has taken ineptitude of heroic proportions for it to allow John Howard to appropriate nearly all the credit for the resulting success and to make the issue of economic prosperity his own.” (Quarterly Essay, issue 26). Heroic indeed!

  76. Donald Oats
    August 12th, 2013 at 14:47 | #76

    Another area where Labor has failed to promote its successes is with regards to AGW^fn1, and their policies for putting in place a price signal on greenhouse gas emissions. Coupled with the various subsidies for household PV systems, this has encouraged real innovation around renewable energy. These policies boost the demand for these systems, in turn driving down costs of manufacturing them, a positively reinforcing cycle.

    What is less well considered is the positive boost this has also had upon research and development into effective local reuse of energy at the source of production, particularly for small scale systems. As an example of thinking about small scale systems, PV systems naturally heat up during daylight hours, and instead of letting this heat dissipate back into the environment, it is possible to reuse it as part of a house’s heating and cooling system. As greenhouse gas emissions become more expensive, I believe we’ll see a lot more work in this energy reuse space for localised (eg household) systems. Large scale systems have plenty of work going on, but action at the household level is vital too.

    So why isn’t the ALP promoting the positive effects of GHG emission pricing in terms of concrete examples that the general public can appreciate? Instead, we get these blasé statements by Labor about they put carbon pricing in place, as if that is the end result, the thing the public care about. It is too abstract for many people to appreciate, and abstraction is the friend of the opposition’s attack dogs—they just hack into the fear that carbon pricing is a tax, as if there are no compensating benefits.

  77. Donald Oats
    August 12th, 2013 at 14:53 | #77

    fn^1: AWG = Anthropogenic Global Warming. I shudder every time I hear Climate Change used instead of AWG, for the simple reason that it is so easy for people to go “Hang on, climate change is always happening, it is natural.” Which is how deniers muddy the water. At least with AGW, we are identifying both the human factor, and the global nature of the phenomenon, IMO.

  78. Fran Barlow
    August 12th, 2013 at 16:12 | #78

    @Donald Oats

    I shudder every time I hear Climate Change used instead of AGW, for the simple reason that it is so easy for people to go “Hang on, climate change is always happening, it is natural.” {typo corrected}

    I don’t. “Global Warming” allows fools to say “where’s all the warming?” on any chilly day.

    The term “climate change” (originally ‘climatic change’ until about the late 1970s) is about 80 years old and was in regular use from the 1950s. It became the standard when the IPCC formed in 1988.

    In the end, when some fool dissembles, they need to be corrected. I was in front of some year 7s the other day and making just this point — the difference between weather and climate. I cited the example I gave above and one kiddy put his hand up and said — “hey yea — that’s what my Gramps always says“.

    Ah“, I responded, “adults sometimes like to make jokes about stuff like that. Most of us know the difference, and now you do too, so next time he says it just say ‘good one Grampsand laugh“.

    Sadly“, I continued, “every now and again you will come across people who really don’t know the difference, and that’s really sad, because it shows they weren’t paying attention at school“.

    It’s not really that hard.

  79. Jim Rose
    August 12th, 2013 at 17:56 | #79

    @Ikonoclast I was plainly wrong. Rudd needed cheat sheets to get through the debate and was out of touch on basic issues such as the new airport for sydney.

  80. may
    August 13th, 2013 at 11:42 | #80

    notes is “cheat sheets”?

    so accusations/allegations is “facts”?

    that sounds a bit murdoch.

  81. alfred venison
    August 13th, 2013 at 12:48 | #81

    of course rudd knows about the sensitive second sydney airport issue that’s why he dodged the question der. everyone’s briefed to dodge the question. does anyone here know the precise wording of the rule? no news medium to my knowledge has linked to it or quoted it at length. perhaps i missed something. i want to know if as written it can be construed to be referring to stage props and the like of power point presentations mainly or exclusively. -a.v.

  82. Nathan
    August 13th, 2013 at 23:28 | #82

    The wording was the following (link below):”The Leaders may have a pen and paper on the lecturn [sic] and no other documentation or props.”

    http://images.theage.com.au/file/2013/08/12/4653668/debaterules.pdf

    So, it seems that the notes weren’t kosher with the agreed rules. Having said that it seems to me these rules are a terrible idea? I’d kill to have the leaders debates be as fact and figure heavy as possible, as opposed to current operating procedure where being repeatedly factually incorrect (as Abbott was about the carbon price and NBN) seems to have little consequence.

  83. kevin1
    August 13th, 2013 at 23:34 | #83

    @Nathan

    Why on earth are you and others getting distracted by this process issue? I would like to hear your views about the substantial issues.

  84. August 14th, 2013 at 00:26 | #84

    Nathan :
    The wording was the following (link below):”The Leaders may have a pen and paper on the lecturn [sic] and no other documentation or props.”
    http://images.theage.com.au/file/2013/08/12/4653668/debaterules.pdf
    So, it seems that the notes weren’t kosher with the agreed rules. Having said that it seems to me these rules are a terrible idea? I’d kill to have the leaders debates be as fact and figure heavy as possible, as opposed to current operating procedure where being repeatedly factually incorrect (as Abbott was about the carbon price and NBN) seems to have little consequence.

    I have a mathematical background, so what leaped out at me was the distortion implicit in Rudd’s claim that 70% of the Pacific Solution people ended up in Australia anyway (I’m quoting that percentage from memory, but even if I’m misremembering it will do for purposes of illustration). The thing is, the proportion isn’t what counts, the numbers being settled are what counts. If Abbott’s claim that it made the boats stop coming is sound – and Rudd never, ever addressed that as far as I noticed – then even that 70% (which Abbott did challenge) would be on a much smaller base, and that is what counts. So, harping on the proportion instead is not treating the audience with due respect.

    Now, for all I know, Abbott’s factual claims may have been unsound too, but my background qualified me to spot that Rudd was bringing out the wrong thing there, just using internal evidence to spot it (I would have needed all sorts of statistical resources ready to hand to spot other kinds of error on the fly like that). And if Rudd had the advantage of briefing material, then either he or his briefers were supplying a wrong emphasis when they knew (knaves) or ought to have known (fools) better. And I don’t like being treated with that sort of contempt, of being expected to choose them whether they are knaves or fools. Oh, and Rudd’s briefing material really should have been up to the job of demonstrating that his proposed NBN really would deliver all the putative benefits (and it should also have presented costs at the same time, for completeness); as things were, his constant bending back to that topic smelled of nothing so much as counting chickens before they are hatched (or “beautiful plumage”, if you prefer).

    Please don’t get the idea that I agree with what Abbott brought out; while I did see sense in the possibilities of his road building plans etc. (because those have precedents to make comparisons, unlike the NBN), those too can’t be properly assessed without the substance of costs, benefits and roll out times, substance that wasn’t presented either. Limitations of time don’t justify withholding it, since the participants themselves agreed to the debate format with all its limits. I don’t think either party would ever reveal that much substance during an election these days, not only because of the risk of an error being found or made out to be found but also because of the risk of a good policy being poached and run with (from what little I have seen in the Liberal policy document, that document too boxes close like that). That’s not a healthy situation from the point of view of ever having an informed electorate.

  85. August 14th, 2013 at 00:49 | #85

    The ALP has decided that it’s a good idea to run a dishonest “a vote for Wilkie is a vote for Abbott” in Wilkie’s Tasmanian seat of Denison.

    Hmmm, ‘Hey! Let’s remind everyone that we did a very simple deal with Wilkie to win Government in 2007 (we WILL introduce maximum bet limits on pokies) – and then we screwed him. And now he is just a tiny bit peeved.’

    Pure “Faceless” genius, no less than we have come to expect from the ALP.

    Obviously the ALP is deliberately out to lose this election. They could easily win it by abandoning their right wing policies to Abbott and pursuing some genuinely “Left” type policies, but obviously they are too wedded to the neo-con agenda (even though that will see them defeated at the election).

    In my opinion they don’t care. Ensuring a neo-con win is what they really want.

  86. kevin1
    August 14th, 2013 at 01:25 | #86

    @Megan

    Obviously the ALP is deliberately out to lose this election. They could easily win it by abandoning their right wing policies to Abbott and pursuing some genuinely “Left” type policies

    Yeah right, stupidity is the new black. Boy am I glad the denizens of the spirit world aren’t running the ALP campaign. You obviously indulge yourself in a comfortable world where it doesn’t matter who wins and who loses the election – “JQ’s echo chamber gives me what I need.” I’ll bet you never engage in political conversation with the disadvantaged and the proletariat – they would definitely tell you that elections matter.

  87. August 14th, 2013 at 08:59 | #87

    @kevin1

    ALP textbook fallback position of resorting to name calling rather makes my point.

    Although you chose not to address my point, presumably you think attacking Wilkie is a good idea. “Whatever it takes” and so on. But if you re-read my comment calmly you’ll see that what I’m saying is ALP will lose by following that path.

  88. Ernestine Gross
    August 14th, 2013 at 10:17 | #88

    The Wilkie ad is disgraceful and the PR staffer (hollowman) should be sacked, irrespective of party politics. Similarly, those who ascribe their words to other people and claim it was unintentional should be sacked and sent back to highschool. These are substantial issues.

  89. Nathan
    August 14th, 2013 at 14:13 | #89

    @kevin1
    I was responding to alfred venison’s request for a link to the exact rules. I agree that the whole thing is very much a side point.

    As to the substance of the debate, for my money there were two main points where Abbott was way off base and Rudd didn’t capitalise enough:
    1) Abbot’s NBN alternative. The 25Mbps figure is highly debateable, still significantly less than the NBN will deliver, and there remain serious question marks over upload speeds.
    2) The ETS. At one point Abbott said “there is no way that other countries are embracing the kind of carbon tax and the kind of Emissions Trading Scheme that Australia has..” This is an outrageous lie, especially given that under Kevin’s most recent changes we will literally be in *exactly* the same carbon market as the EU.

  90. August 14th, 2013 at 14:30 | #90

    What are the moderation rules? I’m again getting a quoting reply hung up in moderation, this time from last night.

  91. Ikonoclast
    August 14th, 2013 at 16:40 | #91

    @Ernestine Gross

    I agree. Perhaps there needs to an Ethical Behaviours course. Seems like all major political parties have had an ethical by-pass. It’s a sad commentary on the type of people they are.

  92. alfred venison
    August 14th, 2013 at 18:54 | #92

    thanks for the link, Nathan, and sorry i got you into trouble, i appreciate being able to have a look at the rules that someone was said to have broken – “any other documentation” sounds like treasury papers, not hand notes, but that’s peripheral and over. personally i think the greens should be in the debates and both abbott and rudd’s lies about climate could be challenged there and then when uttered on live t.v. but that seems never to be countenanced the excuse given usually being “two party system” blah blah. yeah i say two party system with a proportional voting system and where one “party” is a perpetual coalition and no other party that makes it in from time to time gets a peep in the official state debate. in canada with a first past the post voting system every party with a seat in the lower house gets a place at the debate, even the greens with one seat and the quebec party that runs in only one province. the selection criterion shouldn’t be whether or not they have a chance to form government but whether or not they’re in the lower house. i’d like to see the bush socialists account for their policies and positions themselves and in their own damn words and stop riding the coattails of their semi-sophisticated liberal country cousins. and get the greens in there too, that’d be debate! -a.v.

  93. Jim Rose
    August 14th, 2013 at 18:57 | #93

    Great to hear that the Libs are preferencing the watermelons last.

    This will knock the Greens out of the House unless they get 40%+ of the primary vote. See Antony green’s blog post today.

    The long-term implications for the senate are more important. Labour will win any close competition for the 6th seante seat with the greens.

    This will limit green representation in NSW and Qld at a minimum and make things tough for them in SA. The greens get a quota in Tasmania and a near one in Victoria. .

    In WA, the tussle is between the greens and the WA Nats. In 2016 onwards, the tussle for the greens may be with a third labour senator.

    If the national vote for the greens goes down by more than a few percentage points, there long term future in the senate in the main Australia is in long-term doubt.

  94. Jimmythespiv
    August 14th, 2013 at 21:00 | #94

    The whole premise of prof Q’s assertion on Swannys economic management is wrong. Even if you allow that the gummint handled 2008-9 well (and I’m not so sure -see John stone’s article in The Murdoch), its been 4 years of incompetence since- no consistency and pandering to union interests (NBN just one example) Methinks the Euromoney gong is a poisoned chalice.

  95. Jim Rose
    August 17th, 2013 at 16:48 | #95

    The pink batts stimulus is overrated because in modern Australian politics it is standard to promise to fund new spending proposals and return to surplus soon.

    That makes the Ricardian theory of deficits the most optimistic theory of deficit spending. Throw in some animal spirits, and it is safe to assume that deficits will lead to more than 1 to 1 tax rises in the future. Why is ignorance about future taxes always assumed to under-estimate the future taxes?

    It is well know that the fiscal burden of an ageing society will lead to tighter future budgets and higher taxes too. Another reason why the Ricardian theory of fiscal deficits the most optimistic theory of deficit spending

    Eugene Fama noted that government bailouts and stimulus plans seem attractive when there are idle resources (unemployment) – but
    1. Bailouts and stimulus plans must be financed.
    2. If the financing takes the form of additional government debt, the added debt displaces other uses of the funds.
    3. Thus, stimulus plans only enhance incomes when they move resources from less productive to more productive uses.

    In the end, despite the existence of idle resources, bailouts and stimulus plans do not add to current resources in use. They just move resources from one use to another.

  96. Jim Rose
    August 19th, 2013 at 21:13 | #96

    Rudd is now more unpopular than when he was dumped last time. The more they see, the less voters like what thet see.

    His problem was the same when he was dumped. Does not know how to fight his way out of a hole.

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