The latest from my new Blogstack
I can’t remember any previous time when I’ve been in unqualified agreement with Chris Uhlmann, but his description of the current election campaign as a policy-free contest between “a pathological liar, which is what the Labor Party seems to be calling the government, and a gutless fraud, which is what the Prime Minister essentially has dubbed you,” Of the two, I’ll give the higher preference to the gutless fraud, after ranking all acceptable candidates ahead of them, starting with the Greens.
To preserve my mental health, I’m going to refrain from any further commentary about the major parties. I may offer some comments on the Greens, the only party putting forward any serious policy proposals in this election, some of which I support and some I question.
Feel free to try and dissuade me. In particular, if anyone can make a better case for Albanese and Labor than “not Morrison and the LNP”, I’d be glad to read it.
And having sworn off election commentary, I’ll do my best to give you something interesting to keep your minds off the whole sorry process.
John Quiggin 
It would be useful for you to be a bit more specific about which of the Greens’ economic policies you support. I think their economic policies need some constructive criticism.
Their policy of free healthcare, childcare and free education (for life) for all people is economically inefficient in the sense that, people will undertake these activities which they value less than the social cost of providing them. These policies make no sense distributionally either.
Their policy of providing homes for $300,000 for those want them and funding this move by taxing billionaires seems to be childlike populism.
The policy of restoring manufacturing in Australia via government investment in industry seems dangerous in ac mixed economy.
The policy of outlawing casual and contract work seems unworkable.
I agree that the Labor and Liberal policy packages are uninspiring – the expansionary policies they seem intent on pursuing will hurt an economy that is currently growing strongly with low unemployment, strongly recovering tax receipts and emerging inflation. The spendthrift fiscal policies that were ineptly introduced during the virus lockdown, such as JobKeeper, seem difficult to have generated permanent lack of much fiscal discipline which will mean that interest rates need to be hiked earlier and to a greater extent. These increases will hurt people.
But I don’t like the Greens economic policies either so it’s hard to rank the parties.
If Australia is going so great now then why could it afford to give me a free tertiary education but not my kids? Why could my wife and I afford to buy our first house in our twenties and pay it off by my early 30s (her late 20s) when my kids can’t buy houses at all? They are better educated, smarter and more motivated than I was and also got themselves better jobs earlier than I did. Go figure!
Okay, the answers are simple: rampant inequality, lack of taxes on thewell off to rich and perverse incentives for the rich and corporations to enrich themselves even more: for example negative gearing and policies which drive residential asset inflation.
Plain fact is we have to tax the rich like they used to be taxed and also remove all the subsidies and perverse incentives enacted for the rich to get ever richer. It really is as simple as that. Complicating these blatantly simple facts is just self-serving, self-interest from the upper middle class and rich. Going by the demographics and deciles I am mid to upper middle class baby boomer generation and even I can see this plain as day. Not sure why others can’t see it.
Young people, other than those with truly rich parents or inheritances, are being screwed into the ground by this system. The whole current system disincentivizes hard, honest work and incentivizes gaming and scamming the system as investor or business person getting multiple government rebates and subsidies. It’s a giant scam system for the investment and business rich. It’s plain as day.
Harry Clarke: nobody wants to go to the doctor or dentist for fun. The fear that surgeries will be swamped by hypochondriacs if the service is free is absurd on the face of it and belied by the experience of the many countries operating health care without charge at the point of use. The same prior holds for child care: people don’t have more children just because kindergarten is free. You may have a half-point on education, but under-consumption if you charge is surely the greater risk, plus reinforcement of unjustified and inefficient inequalities.
James, teaching economics for many years I always found it difficult to provide examples of goods in completely inelastic demand. I used to use as an example the demand for Insulin by Type 1 diabetics but it turns out that is false – people do vary their quantities demanded with price – they change their behaviour and diet. Contrary to popular belief the demand for heroin by addicts is in fact quite highly price elastic. But now you are telling me that the demand for health services and child care services is completely price inelastic. I strongly disagree and claim that these elasticities are quite high.
I didn’t assert that people engage in these activities for “fun”. I said their willingness to pay for these services would in some cases be less than the social cost of providing them so society would lose by providing them for free. BTW if you believe fertility decisions are independent of the costs of having children you should read Becker. You are just dead wrong.
On education you assert “underconsumption” is the big risk but how is that defined? Are you saying that if a person values an educational service at $3000 but it costs $20,000 to provide that that is ok because it might be that you judge the education to be desirable. I don’t support these illiberal ideas.
You talk about inequalities in education. How does providing free health, childcare and education to the very wealthy promote equality? Current Government policy provides a 50% rebate on the cost of childcare to families earning $254,000 per year. The Greens want to increase this subsidy to 100%. I fail to see how this will promote the abolition of “inefficient inequalities”.
Finally, where is the evidence that zero charging does not create excess use in health care? Go to the ER at any hospital in Australia and you will see long queues. Queues seem to be a persistent problem in both the British and Australian health care schemes. There is evidence of excess servicing via the well-known literature on “supplier-induced demand” in medical services.
Harry,
The flaw at the base of your market ideology (for that is what it is) is that all things cannot be measured in money. Actually, nothing can be validly measured in money. The fact that we do it is immaterial. The fact that we do it and create godawful existential crises for individuals and the human race and the biosphere and planetary systems IS material, The total unsustainability of unfettered market capitalism is its real world refutation.
A formal refutation of the fallacies of market capitalism is profoundly simple but it took brilliance to derive in the face of the axiological confusion in neoclassical economics.
There is no such thing as economics, only political economy. In turn, political economy is a branch of moral philosophy which is a centuries old view of course. It comes back to axiology AND science.
Ethical or moral philosophy values cannot be measured in any physical scientific dimension. Reference the International System of Units. Hence the numeraire (money) is a unit with no real dimension which invalidly attempts to equate incommensurate real items in a social-fictive dimensions, namely money. The choice to do this is a moral choice not a logical or scientific choice. The choice to accept the unacceptable outcomes is also a moral choice: rampant inequality and planetary destruction by market fundamentalist capitalism come to mind.
The attempt to mathematize economics falls foul of a most basic principle of applied mathematics and science. Items on both sides of the equation must be commensurate or equated in commensurate dimension(s). Money calculations would have that a human life can be equated to x widgets. See Capital as Power – Bichler & Nitzan.
The very fact that we have legal laws, regulations and market rules indicates that we don’t accept that money is a valid way to equate all values. Hence we cannot legally trade in human slaves these days (for example). Money and markets are not abolish-able and may never be abolish-able (though the coming likely extinction of the human race would certainly abolish them.) However, we must move in that direction as far as possible and let the empirical feed-backs tell us how far and fast to move.
The corruption and regulatory capture you rightly cavil against have been greatly enabled by the wealth inequalities which have arise from the unfettered markets which you continue to seem to advocate. Your apparent extensive belief in the ability of markets to properly value things and efficiently and fairly use and allocate rescources is not borne out by the empirical results thus far of neoliberal-style unfettered capitalism. The real results are increasing inequality, unaffordability of homes (as an example) and overall elite oligrachic and corporate rule of our politics and all the attendant regulatory and subsidy capture. The track record of over-reliance on markets is abysmal and now existentially threatening to humans. We face rapid global extinction if we continue this system.
Harry C please provide some research & references for your claims;
1) “the demand for Insulin by Type 1 diabetics but it turns out that is false – people do vary their quantities demanded with price – they change their behaviour and diet.”
2) “Contrary to popular belief the demand for heroin by addicts is in fact quite highly price elastic”.
Re #1 and type 1 diabetics, why do they “change their behaviour and diet”? Or was it only price you considered?
Re #2 heroin addicts, what year did you last research and apply it to your “teaching economics for many years”.
I presented a heroin bust (enforcement) vs price model to the Office of Strategic Crime heads and researchers in Canberra in 1994.
OSCA – Predecessors
“On 1 January 2003, the Australian Crime Commission (ACC) was established under the Australian Crime Commission Act 2002,[2]superseding the National Crime Authority(NCA), the Australian Bureau of Criminal Intelligence (ABCI) and the Office of Strategic Crime Assessments (OSCA).”
https://en.wikipedia.org/wiki/Australian_Criminal_Intelligence_Commission
Thanks in anticipation.
K2, On Heroin. Numerous studies. Found this on a 1 minute Google search. https://www.aic.gov.au/publications/tandi/tandi606
Obviously the demand for insulin is pretty inelastic but not perfectly so. People can change their behaviour (e.g. exercise) and the types of foods they eat to reduce the need for insulin if its price increases. It was an extreme example taken to show that even what seem to be perfectly inelastic demands are not so. But overall a very minor and diverting point.
I wrote a number of papers on illicit drugs (and on heroin in particular) but I’ve been retired for 7 years. I had a Large ARC Grant on addiction around 1990 and I worked in the area for about 3 years. You can look these up on the web yourself. Again diverting from the main argument.
Harry,
Australia ended a costly war (WW2), brought soldiers home, demobbed them and then sold many of them (and their brides) state built Housing Commission houses circa early 1950s at affordable prices and 3.5% interest rates IIRC with long term loans underwritten by the government owned Commonwealth Bank. These policies worked and create viable working class and then middle class homes across the suburbs of Australia. Australia then thrived in the 1950s and 1960s. I ought to know. I grew up in such a house. Then I and my two brothers got fee-free primary, secondary and tertiary education (me as the youngest with TEAS as I had first established financial independence and then went back to university.)
Please answer these questions:
(1) Is Australia richer or poorer per capita now than it was in circa 1950?
(2) If Australia could afford those things then why can it not afford these things now?
JQ – you seem to be scoring pathological liar and gutless fraud roughly equal. That seems pretty unfair to the PL, as you’re leaving out corrupting of public life, misogyny not even disguised, anti-cultural and environment ideology, callousness bordering on sociopathy (for some of these he has been assisted by his gang, so not entirely his own work) to list but a few of the man’s talents and contributions – surely he deserves a significantly lower score than the GF. Would make a second press-fuelled miracle even more miraculous.