Keynes in 2011

[Leftwinger]

I think politics as a whole has moved a long way to the right as the approach to economic governence called "neo-liberalism" (nothing in particular to do with the Australian Liberal party) became broadly accepted. The Keynesianism as practiced by leaders such as Menzies was progressively discarded from the mid-1970's on as governments got out of directly running large parts of their economies. One of the results was a permanent rise in the unemployment which had been all but banished in the post war era. Instead of unemployment being a policy target ie as close to zero as possible, it has now become a policy tool which the RBA uses to discipline inflation.

The last time serious recession threatened, our government emberaced the neo-liberal approach of "if government just stands back, market mechanisms will soon correct the imbalance". Unemployment then proceeded to rise to 11% in this country and I was among them. Given that the shock this time was much bigger, the present government were right to not put faith in the notion of self-correcting markets. The stimulus certainly wasn't perfect, given the extreme hurry but it was swift and decisive and prevented some very severe outcomes from occuring.

[Jovial Monk]

I consider myself “left” because I do believe unfettered markets are bad (and 2008 proved me right) and that the State can and should use its financial clout to assist all to get better employment outcomes through education or direct action in the market. A full employment target of 1% should be the goal aimed at and fuck those NAIRU worshipping neocon fuckwits at the RBA. Stuff like the NBN that helps grow the economy, that helps education by sharing scarce educational resources and helps achieve better outcomes in health by enabling more people to remain at home and out of nursing homes and so cutting the drain on the health budget are good.

BTW, for the danger of the widening circle of countries introducing “austerity” measures and the danger this poses to a new Long Depression see: http://www.polanimal.com.au/viewtopic.php?f=5&t=1100

[lisa jones]

Good point there Lefty!

Let's not forget that Paul Keating is considered to be the father of economic rationalism in Australia. Interesting given he was a Labor PM hey.

Having read some of the posts on this page alone .. I'm left wondering about these "left" & "right" terms we use on political forums such as this. How accurate or relevant are these terms as descriptors today given that the boundaries have become so blurred?

I'm reflecting on the above and contemplating the implications of Leftwinger's post atm.

[Jovial Monk]

IMF gives tick to 'unbalanced' global economy
By Bronwyn Herbert

The global financial watchdog says the world's economy is recovering but the pace of growth is unbalanced.

The latest data from the International Monetary Fund (IMF) shows the global financial health is strong despite the sovereign debt crisis in Europe.

The IMF highlights the risk to the global economy of surging oil prices, which economists say will further fuel Australia's two-speed economy.

IMF chief economist Oliver Blanchard says the world's economic recovery is gaining strength but was quick to point out that it remains unbalanced.

"For the world economy, for both 2011 and 2012, we expect the growth rate to be 4.5 per cent, a fairly high growth rate," he said.

"But if you look at the details you find that for advanced economies we forecast only 2.5 per cent for each of the two years, and for the emerging and developing countries we forecast 6.5 per cent for each of the next two years."

http://www.abc.net.au/news/stories/2011 ... ion=justin

With the recovery from the floods/Yasi plus the NBN going ahead and the remnants of the BER program, the offspins of the NBN will will grow at more than 2.5%

[Jovial Monk]

A complete moron wrote:

Sappho is correct. Australia didn't need to throw away their $20bn surplus because Rudd and Swan panicked like little girls and gave away free cheques only to try and scrounge them back again via levys and carbon taxes

Gee is there something worse than complete moron?

Firstly, mining didn’t carry us, in the crucial early months of the GFC mining was in freefall until the Chinese announced their big stimulus.

Now, listen carefully, idiot, this is PS level economics: in a recession businesses don’t make much money and many go broke. Here not many went broke thanks to timely stimulus, but business saw low profits or indeed losses. Businesses making not much profit or losing money don’t pay much company tax! Very simple primary school level economics and simple logical deduction. Now, really get that thinking cap on: Costello gave away so many tax cuts to the rich, against Treasury advice, that company tax payments became a very significant part of total federal govt tax revenue, and this tax revenue nosedived in the GFC and so the Budget went into deficit.

And it was good that the budget went into deficit, providing funds to keep demand up in the private sector. A lot of the stimulus money has been repaid as tax by now, it is the shortfall in tax revenue now keeping the budget in deficit. Imagine an alternative scenario where Costello had had some smidgen of an idea of economics. Maybe he might have reduced company tax a bit, encourage private sector investment. Now the GFC hit, unemployment went up by, what was it, 1%? 2%? Assume 2%, the PAYE tax revenue would have decreased by that 2%, roughly, company tax receipts would have gone down but overall the decline in fed revenues would not have been so drastic.

But it is the drop in company tax receipts that has mainly caused the deficits you see. Initially forecast as $225Bn over the Forward Estimates period the brilliant success of the stimulus has seen that run down to below $150Bn. The Vic & Qld floods and cyclone Yasi have put some ripples on this broad picture.

The Business Council of Australia a couple years ago put in a submission to Cabinet to increase the GST to make up for the “volatility of the company tax. Those CEOs love the low tax they pay (one of the goals of neocon fuckwittery and the reason neocon reasoning has seen govt deficits increase everywhere they have been tried) they pay on their very high and largely unearned incomes (another piece of neocon fuckwittery that sees companies short of money and concentrating largely on the short term) and do not want to pay more tax. So put up the regressive GST they reckon, paid mainly by people with a lot less money than ours, and we can keep paying fuckall tax!

So, the BCA agrees with me on the volatility of the fed govt’s tax revenue.

But in a year or two the mining boom Mk2 will see the swelling of company tax into govt coffers—I hope the Labor govt uses that better than the idiots Howard & Costello!

[Jovial Monk]

The same son of a moron and an idiot bleated:

The US and EU should have been the proving ground for Keynes...but it wasn't and isn't

I'm sure lefty will pop in saying it was because they didnt spend enough trillions or give enough away... but the fact remains that Keynes doesnt work

Care to give some idea of the Keyesian stimulus carried out there, taking care to distinguish between quantitative easing and keynesian stimulus? Listening . . .

[Jovial Monk]

And the same heap of festering spaghetti bog from the month before emitted:

Keating stole every idea he ever had from the libs

Did he? Really? Because no ideas were ever floated by his predecessor, our worst–ever Treasurer (and worst PM) Howard.

I think Keating might have done some reading and stuff, talking to business people and union leaders and such. He may not have had formal qualifications but he was not stupid. To say he stole his ideas from the Libs is just idiotic, the Fraser govt was one not noted for any excellence in any form—they even left the Budget in worse shape than the supposed economic vandal Whitlam did. (Whitlam at least spent money sewering out cities, we no longer have nightsoil carts travelling around emptying buckets!

Keating did have the Wallis enquiry report, untouched by Howard, but that is not a “Lib idea.” John Hewson has been publicly scornful of Treasurer Howard to come up with a single idea, propose any policy at all to Cabinet.

Jesus Christ IQ you don’t half talk some nonsense!

[Leftwinger]

IQ can't answer because he's busy getting evicted from an exotic transsexual fetish club on a seedy Asian stopover somewhere.

The direct underpinning of demand by government was larger here (as a proportion of the economy) than in most other places. And mining most certainly did not save us - I live in a mining town and I watched the wave of job losses here. Mining went backward until the Chinese and other large Asian economies quickly put enormous stimulus packages in place, boosting demand for our raw materials. China passed a stimulus package around two-thirds the size of the entire Australian economy. It remains to be seen how our mining will fare now that the Chinese government has taken steps to deflate what it sees as a dangerous real estate bubble. If their demand for steel and other building materials falls significantly, it will impact on our iron ore, coal and bauxite/aluminium sector.

But again, the size of mining as a part of our economy is routinely exaggerated. It is another meme that mining is Australia's golden goose. After all, mining and all the ancillary services attatched to it account for less than 2% of total employment and only contribute around 6% to GDP. Not completely insignificant but certainly not the backbone of the economy either. And that 6% contribution is overstated since a significant portion of the wealth generated by digging up Australia's dirt is actually claimed by foreigners, owing to the heavy foreign ownership of our most lucrative miners. That whole 6% only enters the domestic spending stream in theory - mining could be as little as 3% or 4% of GDP.

[Jovial Monk]

We discussed this—here maybe—in terms of coalships waiting to get into Gladstone harbor how previously the ships stretched out as far as the eye could see but that had dwindled to a tiny handful. Hmmm that might have been in the Sheep Pen because Deepy said we didn’t have any evidence

[Outlaw Yogi]

I seem to recall that both Malcom Frazer and Doug Anthony signed a petition to stop Howard from selling the snowy, Frazer describing it as "privatisation gone mad". This from a former Liberal PM!

Maybe so, but that's not what moth-balled the Snowy sell-off.
Believe it or not when plans for the Snowy sell-off were announced, I, yes I, at that time the Hinkler-Burnett Greens delegate to Qld Greens State Council emailed Bob Brown via his press agent or advisor (or both) Ebony Bennett informing them the sell-off was constitutionally illegal, and sent ...

Commonwealth Of Australia Constitution Act
http://www.aph.gov.au/senate/general/co ... apter4.htm
Chapter IV. Finance And Trade.

100. The Commonwealth shall not, by any law or regulation of trade or commerce, abridge the right of a State or of the residents therein to the reasonable use of the waters of rivers for conservation or irrigation.

The Australian Constitution
http://www.aph.gov.au/senate/general/co ... /index.htm

Within 2 days TV news were saying "Greens say Snowy sell off illegal" ... and from memory Bob Brown and his lawyers met with Howard & Co the following day .. and a couple of days later the whole idea of the sell off just fell apart.

A while after, 2, 3 years maybe, a push from a constitutionally ignorant multi-state grass-roots lobby group got the Fed govt to seek federal control/oversight of the Murray-Darling basin, which they put to the states at a COAG, and had to buy the states off to gain agreement, from memory Vic held out for 2 or 3 years, demanding a better deal, and there was nothing the Fed govt could do about it, due to s. 100 of the Australian Constitution.