They love spending the money but with the disastrous results now being recorded everywhere, it is turning out that this deficit finance has not been such a great thing after all. We are looking in the eye of the great Keynesian fail and the world will turn to deal with those C+I+G-based theories as soon as we have dispensed with the politicians who have ruined the economies they have managed based on this Keynesian nonsense.
My Free Market Economics was written in 2009 well before these disasters. It was, in fact, written precisely because these were the disasters I fully expected. I am told occasionally that there is some other way to make sense of why this increase in public spending has led to a worsening in employment growth to accompany the debt other than through a return to pre-Keynesian classical theory and Say’s Law but if there is I haven’t come across it. Austerity is the new black which merely says governments must live within their means.
The above chart is doing the rounds – picked up on Instapundit in this instance – and shows that the deficit blow out most assuredly began with Obama who now prefers not to take the credit. The story in Australia would be even worse since the budgets all leading up to Labor taking over in 2007 were in surplus to go with our ZERO debt.
Swan and Gillard promise a surplus they will never deliver but wish they could. They now talk about the need for budget balance in the same way as any of the pre-Keynesians. And the fact is there will be no return to economic health until the public sector is reduced and the private sector is given sufficient space to grow and expand.
One of the great hypocrisies of the Left is there continual instance that not everything is about money and that people who pursue more money are insatiably greedy.
But every time they come to Government they demand more money so they can spend more. Their actions betray their core belief that it is all about money.
Why is it that conservatives and libertarians want to restrain government? Because they understand that money is very important, but that it can’t solve every problem.
One of the reasons we know that money can’t solve every problem is hat we make it, value it and understand it. The Left taxes it off us and spends it like drunken sailors because so many of them work in the public or not for profit sector that doesn’t value money but thinks it can solve every problem.
John Comnenus
8 Oct 12 at 8:59 am
A simple way to save a lot of money, and to grow the saving over time, would be to return public service conditions and remuneration to the market. This would mean stopping any new public servants getting access to the outrageously generous conditions provided to all APS personnel and ot paying any pay top up to compensate for their loss.
This would mean every new public servant would get:
9% super, rather than 15%, no flex days, RDO, no more than 20 days leave and work a 38 hour weeks like every one else in the workforce. These perks would save the commonwealth billions and stop the obscenity where public servants enjoy higher pay, more job security, better benefits and more leave than tax payers in the private sector who provide the funds to pay for this bloated and greedy elite.
John Comnenus
8 Oct 12 at 9:11 am
Awaiting Alice’s profound economic analysis of this graph.
Elizabeth (Lizzie) B.
8 Oct 12 at 10:31 am
sorry, bar chart.
Elizabeth (Lizzie) B.
8 Oct 12 at 10:32 am
Why has it taken you so damn long to get to this point, Steve? Going on about pre-Keynsian stuff and Say’s law might be good in academia, but it means f-all anywhere else. Personally, I haven’t understood a word of it.
Why don’t you start explaining what needs to be done to avoid the coming economic meltdown? Why is European “austerity” not really austere at all? We know what Obama will do if re-elected (ie nothing), but what should Romney do if he wins? Or is it too late?
I know why Milton Friedman won his Nobel Prize – people could understand what he was talking about. I wish more economists would give it a try.
DavidLeyonhjelm
8 Oct 12 at 10:44 am
Look David. Why don’t you order my book and read it. Blogs are just random thoughts on current events. Free Market Economics is cover to cover on the need for value adding activity and the benefits of small(er) government. And it explains why government deficits and spending cannot possibly drive an economy forward. It even sets out the right policies to adopt in recession. All for $36 so why are you waiting?
Steve Kates
8 Oct 12 at 11:02 am
There you go, Alice. Advice from the master. Thirty six dollars will see you straight.
Elizabeth (Lizzie) B.
8 Oct 12 at 11:19 am
Steve I see the political problem is I am still reading/hearing/viewing countless MSM reports saying “Austerity has failed”. Without exception what they are saying is some Nation that was completely and hopelessly spending more than it “earned” has now cut back to “just” spending lots more than it “earns” and this is counted as austerity. The average Joe doesn’t have time or inclination to investigate further so I am fearful there is a vast number of people who think there is a lot of governments who have cut back to genuine surpluses who have “failed”
The other challenge is any Nation that has genuinely cut back, say Estonia, if it doesn’t bounce back to about 8% GDP growth the next day it too has “failed”
Not telling you anything you don’t know but this is what needs punching through.
kingsley
8 Oct 12 at 11:39 am
Not this shit again.
Abu Chowdah
8 Oct 12 at 1:25 pm
Why not Abu? How much do you think that 15% superannuation guarantee costs tax payers? It is a guarantee they can’t get, even though they fund the APS super guarantee.
John Comnenus
8 Oct 12 at 2:46 pm
Far more serious than 15% super is the defined benefit funds. These need changing urgently.
The 15% super is just to make up for a lower wage – which in my view is exactly right – public servants are generally not paid as well as the private sector in comparable jobs.
Job entitlements – well lots of private companies have RDOs. Nothing abhorrent here. 20 days leave is statutory minimum but private employers do now offer more, such as parental leave prgrams in excess of minimum.
Most public servants work longer than set hours.
I think it would be better to focus on govt programs which should not be done internally, rather than this shot at the employees.
pete m
8 Oct 12 at 3:27 pm
These need changing urgently.
The last defined benefits super scheme was shut down to new entrants in 2005.
Quentin George
8 Oct 12 at 3:35 pm
“reduced” as in the Roman Army reduced Carthage would be about right.
Eyrie
8 Oct 12 at 6:34 pm
That’s right John, just go for a non-discriminating policy. Make everyone hurt, even the people who work their arses off and do untold good for Australia and her citizens, just to slap the non productive APS shitbirds.
About as smart as the ALP’s broad brush efficiency dividend policy.
I always read your posts, just as I always skip Monty and SFB posts, so I know you can do better.
Abu Chowdah
8 Oct 12 at 9:32 pm
Abu Abu Abu,
Your problem is the one that besots a univeristy law lecturer, an engineering lecturer etc.
Your market value is way above what a macrame lecturer has.
The real solution is to split up the APS in a more genuine manner.
There should almost be a ‘enlisted’ and ‘officer’ corps where the ‘officers’ are highly specialised and paid more. Let the career climbers go into the ‘enlisted’ where they can switch jobs for being very good at holding meetings and having a poor undergrad degree… whereas the more talented and specialised will be able to hold senior positions with less experience and on merit.
This challenges the bollocks about fairness and seniority, I know.
If you have a criticism, please tell me what you would do.
I have a friend who has worked in the Canberra private sector and in two APS positions – he says his opportunities to do further training are at the discretion of his line manager. I would have thought a general annual exam/application would be better.
Of course then there is the issue of doing a CBA and taking an axe to bullshit departments like the Office for the Status of Women.
.
8 Oct 12 at 9:40 pm