Month: August 2006

Howard and Costello: keeping interest rates below 17 per cent

John Quiggin50 Comments

If you sign a loan contract, you’re well advised to read all that boring fine print and get good advice on what the terms and conditions actually mean. This is also good advice if you plan to rely on promises from the Howard government. During the 2004 election, the Liberal’s ran on the slogan “Keeping interest rates low”. The content of this promise has now been explicated by the Prime Minister.

“You have to look at everything I said during the election campaign and you will find that I repeatedly said that interest rates would always be lower under a coalition government than Labor.

“In 13 years of Labor, housing interest rates averaged 12.75 per cent and peaked at 17. Under 10 years of coalition government, housing interest rates have averaged 7.25 per cent – a 5.5 percentage point difference.

Supposing, as looks increasingly likely, that Howard plans to stay on for another 10 years, he can manage an average rate of 17 per cent over that period and still keep his government average rate below Labor’s.

But at least Howard gets his facts straight. Treasurer Costello*, is quoted as saying

And the critical thing is to make sure that we don’t have interest rate rises of 300 per cent which would take us back to where the Labor Party low point was, or 1000 basis points, which would take us back to the height where they were under the Labor Party.”

It’s easy to check that the Labor party low point for the cash rate was 4.75 per cent in July 1993. But the message from Costello is the same as Howard’s. Anything below 17 per cent counts as delivering on the government’s promises, and anything below 9 per cent (the current cash rate of 6 per cent + 300 basis points) deserves extra applause.

* I think he’s segued from a selective quotation of home mortgage rates into discussion of the cash rate (only the latter is discussed in terms of basis points), but the implication is the same.

Conservatism invented in 1953:NYT

John Quiggin33 Comments

The term “conservative” gets bandied about a lot these days, and readers may wonder where it comes from. Jason DeParle in the NYT has the answer. It was invented by one Russell Kirk in 1953. DeParle’s opening para (“lede” in US newsspeak) introduces us to

Russell Kirk, the celebrated writer who a half-century ago gave the conservative movement its name

and elaborates later on

Kirk, who died in 1994, wrote 32 books, the most famous being “The Conservative Mind,� which was published in 1953. It championed 150 years of conservative thought, and offered “conservative� as a unifying label for the right’s disparate camps.

I must say, it’s a great term, offering a neat contrast with “progressive”. Surprising nobody came up with it earlier, really.

War and its consequences

John Quiggin66 Comments

The terrible war in Lebanon has been discussed from all sorts of ethical and legal perspectives, but the simplest way of judging war is to look at its consequences.

After weeks of bloodshed, with the vast majority of victims being ordinary people (mostly in Lebanon thanks to the use of airstrikes as a weapon of terror, but with many killed and wounded in Israel as well) whose only crime was to be in the wrong place at the wrong time, it’s hard to believe that anyone could claim that any good consequences are going to come out of this for the people of either Israel or Lebanon (though of course this is precisely the claim being made not only by the belligerents but by their outside backers, from Bush on one side to the Iranians on the other). But as we’ve seen time and again, the logic of war, once started, is remorseless. However obviously wrong the initial decision to go to war, the consequences of ending it always seem almost worse, at least to those who have to admit that the death and destruction they have wrought has been pointless.

And all this was not only predictable, but predicted by nearly everyone who looked at the situation objectively.
Read More »