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
John Quiggin 
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?
But these lead-ups are the only opportunities to get the parties to take ideas on board, though even these aren’t very good.
“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.
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.
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.)
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.
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.
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.
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?
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.
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.
@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”?
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.
John Brookes:
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.
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!
Anybody else suddenly feel the need to hate “Hermes”, their products, and anybody and everybody involved in marketing?
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.
@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.
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.
@TerjeP
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.
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.
@John Quiggin
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.
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.
why am i being barred
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.
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”.
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”
?
i mean
if it were rudd?
on fiscal policy under rudd 1.0, reminding voters of the pink bats may not win many votes.
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.
@Jim Rose The “pink batts” argument was misleading and untruthful and to have it recycled, with bad spelling, tiresome.
@jimrose
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.
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.
@John Brookes
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.
@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.
@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.
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.
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.
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).
and abbot said he didn’t talk about the NBN to mudoch,so what did he talk about?
@Ernestine Gross
You’re confusing me with someone else.
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.
@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.
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.
@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!
@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.
@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.
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/
@Lachlan Ridge
Why are you unemployed? Besides the personal hygiene issue.
@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.