Is it a dodgy graph?

The government keeps making a claim about revenue having fallen. Here is Julia Gillard telling this story to school kids on Monday.

… I think people kind of intuitively know that it’s been a pretty tough period for business and if it has been a tough period for business, that means they are making less money. If they are making less money they are paying less tax and that is less tax than we predicted. So overwhelmingly it’s less money coming in that has changed the Government’s budget.

Okay – except for the small problem that this explanation is actually not true. We have plotted the data from the MYEFO many times but today I want to point to a graph doing the rounds on Facebook.

Graph testing 1

To my mind this graph does a good job at dispelling the lie that the government has less money coming in. Sure it might have less money coming in relative the expectations – but the government simply does not have less money coming in.

This morning Greg Jericho does an audit of various political graphs that are doing the rounds and critiques all of them pointing to shortcomings and misleading indicators etc. Included in his sample is the graph I’ve shown above.

So, we have a poor time scale, distorted vertical scale and use of nominal dollars that exaggerates current revenue.

Those criticisms are true; but correcting for those issues doesn’t change the story the graph tells us.

So first thing that I did was add in real dollar figures that I calculated using the RBA inflation calculator. All real dollar amounts are in 2012 dollars – that is the latest year that the calculator will allow.

Graph testing 2

Revenue recovery is a bit more sluggish but more or less increases after the GFC – so adjusting for inflation doesn’t change the story. What about changing the vertical scale?

Graph testing 3

No – revenue is still increasing in recent years.

Finally what about increasing the time scale?

Graph testing 4

No – still doesn’t change the story.

Now I see this sort of thing all the time. Student often think that if they are able to come up with a criticism that is correct that the argument being made is always and automatically discredited. Now to be fair Jericho isn’t trying to discredit any particular graph, he is warning about misleading graphs.

The moral of this all is that when a friend starts sharing graphs on Facebook, ask yourself what the graph is trying to highlight, and what it is failing to show. Think about the time period used, the measurements used and be sceptical.

And always remember, graphs aren’t always the whole picture, let alone the whole story.

I think that’s all correct, yet it is always true. There is always more to the story than the picture, but sometimes not too much more. The government argument that revenue is down is not true. Down on expectations – yes. Down as a percentage of GDP – probably, but still at about the long-term average.

This entry was posted in Economics and economy. Bookmark the permalink.

118 Responses to Is it a dodgy graph?

  1. Jarrah

    Excellent post. If you don’t mind, I’d like to put your second graph on Facebook 🙂

  2. MattyB

    I was looking at these numbers last night too. I think Tax Receipts and Payments per capita are useful metrics too (and often overlooked). Both increasing in the past 2 terms of Govt.

  3. C.L.

    Jerico gives us a taste of how the ABC’s “fact check” unit is going to work.

  4. Driftforge

    WTH are nominal and real dollars?

  5. sabrina

    These graphs clearly show how deceptive and dishonest this government is, in particular the treasurer.

    On a different subject, can someone explain the effects of currency betting – similar to the one allegedly made by Soros Funds. I understand the fund will be the beneficiary, but who pays for it? And does currency betting create wealth for a country?
    This is not my area, hence is the query. Sinclair may like to enlighten us on this in a different thread in future.

  6. Lysander Spooner

    Driftforge: The Gillard “Government” lives in the nominal world 🙂

  7. Driftforge

    Google is your friend, Drift

    The Cat is my friend.

    So nominal dollars are actual dollars that we spent and received, while real dollars are fictional things that tell us what we would have spent and received if today had been yesterday and our corrections for the difference are valid.

  8. The Gillard “Government” lives in the nominal world

    Unfortunately, the Gillard “Government” bases all its planning on a noumenal world—imagined, I suspect, by a committee of Gillard, Swan, Wong and their friend “John”.

  9. Driftforge

    Have to get back to creating my own dodgy graphs regarding the nominal length of a real submarine.

  10. What Julia Gillard could have said:

    Imagine a government, Labor, employed in the same job throughout the last 5 years. For a period in 2007 to 2013 every year his employer gave him a sizeable bonus. He was grateful but in his bones knew it wouldn’t last, so he spent like a drunken sailor on unaccountable, unaudited, unplanned and generally mad schemes that would ensure his being re-elected – or so he thought.

    Labor was told that his income would rise by around 5 per cent each year over the years to come. That’s the basis for his financial plans. Now, very late, Labor has realised that he’s spent not only all the money his employer gave him on trust to improve the operations of the company, but he has also spent all the money that the company’s previous owner left him to ensure the company wouldn’t suffer in the event of a global financial crisis. What is Labor’s rational reaction?

    It’s unreasonable to expect Labor to cut back on spending and try to recoup some of his losses. Instead, embezzlement of company superannuation funds is a option. Blaming the company’s rivals and critics is another, and it’s also rational to blame the company’s customers for not paying highly inflated prices for the company’s goods and services.

  11. m0nty

    Nominally, Driftforge, you are merely ignorant. In real terms, you’re a moron.

  12. In the quote from Gillard near the top of the post, we read a clear connection between the decreased revenue from what was predicted:

    ” If they are making less money they are paying less tax and that is less tax than we predicted.”

    The claim immediately following the quote is:

    Okay – except for the small problem that this explanation is actually not true.

    The post then goes on to end with:

    Down on expectations – yes.

    So she’s wrong but she’s right, seems to be the lesson.

  13. And at the risk of being excessively gossipy, isn’t it nice that Julia chose the name ‘John’ – the name of her media spinmeister – as her wonderfully non-fiscal imaginary employee?

  14. Gab

    Wow, Drift. Sounds like you’ve boxed monty around a bit in the past. Well done.

  15. Oh dear – there goes the neighbourhood … thank goodness it’s time to do some real work now …

    ta ta boys – enjoy.

  16. Driftforge

    Nominally, Driftforge, you are merely ignorant. In real terms, you’re a moron.

    High praise indeed.

  17. Lysander Spooner

    Monty – gee nice work on the Ad Hominen straight up with your bitter latte. You obviously belong to that Superlative Class.

  18. Huckleberry Chunkwot

    And at the risk of being excessively gossipy, isn’t it nice that Julia chose the name ‘John

    This is not the first time that the possible relationship between TLS & Jock McSporran has been alluded to.
    What gives? I thought that it was common knowledge that he was an uphill gardener.
    Has Jock changed sides?

  19. m0nty

    I have to admit, reading the Cat does make me feel I am a better class of people than you lot. Geez you talk some rot.

  20. Steve of Glasshouse

    John was also her father’s name. Way too Freudian for me..

  21. Huckleberry Chunkwot

    make me feel I am a better class of people than you lot

    m0nty, this is the first symptom of that well known mental disease, leftism.

  22. m0nty, this is the first symptom of that well known mental disease, leftism.

    Yes. That would explain why more than one person here has praised the Abbott parental leave plan because it will raise the average IQ of the population by getting the richer working woman to have children…[/sarc]

  23. Gab

    Notice how monty and SFB are derailing the thread? Anything to run interference for this clusterfluck government of theirs.

  24. Tom

    “Harry” comments at The Dumb: “Noone demonstrates the use of graphs as a propaganda tool better than Greg Jericho, he is one of the best exponents of the technique himself.”

    And sure enough our trolls show up to confirm that leftism is a mental disorder: not being used to the responsibility of government, the left automatically looks for the lie that will best serve the kiddies’ team.

  25. Notice how monty and SFB are derailing the thread? Anything to run interference for this clusterfluck government of theirs.

    Um, have a chat to Philippa about the relevance of her gossip, will you?

  26. Token

    I have to admit, reading the Cat does make me feel I am a better class of people than you lot. Geez you talk some rot.

    M0nty proves how he sees himself as part of the sneer-ocracy which Nick Cater documented dominates the out of touch cronies in the ALP.

    M0nty’s comment underlines the reality that the graphs reveal the ALP are full of economic illiterate liars who need to attack people personally to overcome their emotional inadequacies.

  27. Token

    So nominal dollars are actual dollars that we spent and received, while real dollars are fictional things that tell us what we would have spent and received if today had been yesterday and our corrections for the difference are valid.

    The Liars Party’s shills are playing the whole “we don’t accept the premise of your argument” tactic which has been Rudd, Gillard & Swan’s crutch for the last 6 years.

  28. m0nty

    Wait, I thought we were sneering at Labor voters? Get your stories straight.

  29. Token

    I was responding to your brain dead cry for help M0nty.

  30. m0nty

    Anyone who states that the concept of real dollars is a leftist conspiracy to discredit Abbott deserves to be sneered at as a simpleton. Driftforge’s position is stupidity, plain and simple.

  31. Token

    …the concept of real dollars is a leftist conspiracy to discredit Abbott…

    Now you have waled and stamped your feet to get attention, you fall back to a strawman in a desperate attempt to get some credibility.

    What a hollow emotionally empty world you live in M0nty.

  32. m0nty

    You obviously fell out of the wrong side of the bed this morning, Token. Have a cup of tea and lie on the couch for a bit, there’s a good lad.

  33. Sinclair Davidson

    Gentlepeople – you can trade insults on the open thread.

  34. Tom

    Real dollars, percentage of GDP, net debt — whatever trick works best to disguise the fact that spending is totally out of control — up 66% in six years — on top of an astronomical $271 billion in borrowings which was zero six years ago.

  35. .

    monty

    The Government imposes inflation on us. I am fine to have the nominal amount factored out, but then to factor back in inflation which increases REAL effective marginal tax rates, and decreases REAL putchasing power, at the expense of paying Treasury bills in nominal terms.

    What you are saying is that you want to adjust nominal revenue for inflation but not admit that it is in fact imposed by Government and not admit that it reduces purchasing power, in effect, it is a discretionary power to tax.

  36. TerjeP

    Clearly all the graphs are rubbish. They don’t use a log scale on the verticals axis. 😉

  37. Jannie

    I heard Ms Gillard lecturing the kids this morning about how the size of government (net) debt was no big deal. Its only 10% of GDP she says, its like a family with an annual income of $100,000 having a mortgage of $10,000. No problem, most families have much bigger mortgages.

    It got Barnaby Joyce all worked up, he reckons when you add in netted liabilities and State debt, real Government debt is around 25% of GDP.

    But the kids should be told that GDP is not analagous to family Income. Maybe Government revenue is a better simile, but even that overstates the flexibility of Govt spending.

    A family with an income of $100k, and a mortgage of $100k, is in a reasonable position, so long as the building is reasonably sound. But an economy with a debt equal to its GDP is more or less rooted. What level of calibration should there be to make the family/govt dichotomy analagous? I am thinking around 30% of Govt revenue, to an ‘average’ 100% family income. And then a morgage buys a house, which is a sellable asset and an investment in terms of rental offsets. Govt debt provides nothing but interest costs.

    But since they have no choice but to admit that deficit and debt is out of control the spin will be be all about how its no big deal, and the family income analogy will be trotted out, and how simple it will be for the next LNP govt to pay for the mortgage, after Labor did all the hard work of spending the money.

  38. m0nty

    Now inflation is a leftist conspiracy! What else, the canceling of Celebrity Splash?

  39. TerjeP

    Jannie – GDP is more analogous to national income not government income. It is basically the tax base not the tax income.

  40. Lysander Spooner

    Ok Sinc, discarding Monty and SOB’s intellectual snobbery and insolence; surely the “Government” has a bunch of trusty people at Treasury who know what factors to add into their graphs for next week’s budget (hey, I used to work there!).

    The last 4 budgets have had nominal revenue under real revenue…might we see a change in this ‘mechanism’ next week?

  41. C.L.

    Monty and Steve wounded beyond recovery.

    A grand plan NDIS that catapults Abbott to a 12 point lead will do that to lefties. 🙂

    Now just lashing out.

  42. Tom

    Now inflation lying is a leftist conspiracy speciality!

  43. candy

    ‘Gentlepeople – you can trade insults on the open thread.”

    Now that’s a novel idea …

  44. m0nty

    CL, I am quite happy with Abbott being forced into supporting Labor policy and also supporting a Great Big New Tax to fund it. Along with the PPL, he is making it a habit. Good result for everyone, and an excellent precedent. He’ll turn into a half-decent Laborite at this rate.

  45. Gab

    LOl thread about Labor lying yet again and m0nty say AbbottAbbottAbbott. Hilarious. You’ve become a parody of yourself, Big M.

  46. m0nty

    I was only replying to CL, Gab.

  47. Token

    Yes, yes M0nty, the reason why you wreck threads and make personal attacks is always someone else’s fault.

  48. pete m

    Steve – do you agree their predictions were well beyond any reasonable estimate of future revenue, given the trends in place at the time?

  49. Token

    GDP is more analogous to national income not government income. It is basically the tax base not the tax income.

    That sounds like a pre-Obama/Rudd/Gillard definition.

    In this post “neo-liberalism” world the correct definition of the non-government portion of GDP is government subsidies to the rich.

  50. m0nty

    You guys keep saying stupid things Token, that’s not my doing. And you keep replying to me! And saying more stupid things! It’s like Troll Christmas every day.

  51. Gab

    FFS Sinclair ban his ass for derailing this thread.

  52. .

    I’m shocked and chagrined at your ignorance monty.

    Keynesianism is pimping for inflation through fiscal policy. Buy a book you philistine.

    Inflation has costs – you would only like to point out the benefits to Government PR however.

  53. Lysander Spooner

    “Its like Troll Christmas every day”

    Bahahahaha!!!! I second Gab’s move.

  54. Jarrah

    No, Lysander. Insult is not ad hominem.

    Ad hominem is an attack on the person, not the person’s arguments,[7] though mere verbal abuse in the absence of an argument, however, is not ad hominem nor any kind of logical fallacy.[6]

  55. C.L.

    Steve’s gone back to the abortion thread.

    The ectopic pregnancy is his Alamo.

    He thinks it’s a winner and he’ll guard that thread like a Crown Casino bouncer.

  56. Jannie

    Jannie – GDP is more analogous to national income not government income. It is basically the tax base not the tax income.

    TerjeP, I am quite aware of that.

    The point I was making is that the Govt spin equates your ‘tax base’ to family income, to diminish the gravity of the mess it has created.

    The second point I tried to make is that government taxation is far less flexible (a higher % of fixed costs) than family income.

    But the spin is so easy to make – even amongst reasonably economically literate people confusion is easy.

  57. Steve – do you agree their predictions were well beyond any reasonable estimate of future revenue, given the trends in place at the time?

    I don’t know. But I do know that the main graph I want to see isn’t here: one showing forecast revenue from 2009 as against the drop in received revenue that we do see from 08/09.

    Looking at the years from 00/01 to 07/08, one can certainly see a trend which, if it had more or less continued through 09 to now, would show a very large gap between actual revenue and that forecast.

  58. Robbo

    What is really dodgy are the revenue forecasts by that economic moron Swan that have led Gillard to come out with a dodgy explanation to school children (and that in itself is a subject that needs to be explored) about the financial mess she and her incompetent lot have created. It seems obvious to me that Gillard is not as bright as Swan, and ain’t that a scary thought, so she simply parrots whatever it is that he tells her. Swan and Gillard need to be locked up in a room and each made to write 500 times “government revenue has increased”. With a bit of luck that may penetrate their thick heads and they will stop their oft repeated lies about the reasons for our huge deficit.

  59. m0nty

    Dot, given Keynesianism is supposed to be dominant in Western countries, how do you explain low inflation pretty much everywhere?

    Keynesian policy does not affect inflation if it does not crowd out the private sector. I know you and yours like to think that every government dollar crowds out the private sector, but sometimes there are idle workers and spare capacity in the economy, such as in a recession. Read a book, preferably one written by Keynes.

  60. Rafe

    People who respond to inane comments by trolls should not blame the trolls for derailing the thread.

  61. Token

    But I do know that the main graph I want to see isn’t here: one showing forecast revenue from 2009 as against the drop in received revenue that we do see from 08/09.

    I see SoB is trying Jericho’s trick, i.e. don't accept the premise of the graph in a pathetic attempt to stall by shifting the goal posts.

    The graphs communicate the reality and prove Gillard & Swan are lying when they claim they Howard/Costello level of receipts were higher.

    Projections are irrelevant after the fact, except to reveal the how little the people making them understand the market they are working in.

  62. Milton Von Smith

    As at February, nominal revenue growth exceeds the average growth rate of revenue when John Howard was in power.

  63. .

    What are you on about monty?

    Yes there is a trend to low inflation and in the past 60 years Keynes has been repeatedly repudiated.

    This doesn’t actually change the Keynesian argument. It just means that it is wrong.

    Clearly you are bored given there is no football tonight.

    Keynesian policy does not affect inflation if it does not crowd out the private sector

    Yet it always does both.

    If you can have costless public spending you are in utopia.

  64. H B Bear

    Greg Jericho passes as serious analysis over at Teh Dumb. A standout performer amongst poet economists.

  65. m0nty

    Now you’re merely reciting scripture from your obscure discredited heroes, Dot. Economies are by definition performing below capacity in recessions so there is no crowding out from suitable Keynesian stimulus. Saying otherwise only highlights your ideological bent.

  66. pete m

    Steve – 1 last try.

    We are talking 2012 budget forecasts, with the trend from 2000 onwards well understood, even including the GFC slump.

    Was the forecast of 12% + income growth for 2013 reasonable given the 7% trend, worldwide trends with europe still teetering and China sneezing, USA still in a quagmire, mineral prices reducing, projects bheing slated, MRRT shown as a joke etc etc.

    In reality, the 12% forecast was solely done to allow Swan on 2012 budget night to claim his budget for the next year would deliver a $1bil surplus.

    but you will never admit that fraud

  67. Pickles

    Given this is a serious thread (absent sirens, meat saws, slicers and other silliness) I’ll reput a question I posed on the open thread the other night.

    When the government “borrows money” who gets the fees for “placing the debt” (if that is the correct term) and how much are those fees?

    It seems to me that the “fees” on $270 billion would amount to quite a pile and those who get the fees would not want the government to stop borrowing any time soon.

  68. Lysander Spooner

    Jarrah – it was an attack on the person.

  69. Jarrah

    Lysander, it was an insult. Ad hominem is a type of fallacious argument.

  70. Pedro

    “Anyone who states that the concept of real dollars is a leftist conspiracy to discredit Abbott deserves to be sneered at as a simpleton.”

    Real dollars don’t exist. Our currency is nominal and all prices are nominal. The increase in tax revenue relative to inflation is only relevant to the extent that govt spending (ignoring spending choices) will track inflation.

    “Dot. Economies are by definition performing below capacity in recessions so there is no crowding out from suitable Keynesian stimulus.”

    Wrong. Additional stiumulus spending does not just pick up otherwise unproductive workers and capital. It still completes with the functioning parts of the economy. It’s just that the crowding out is probably not 100%. Even more important to understand that the keynesian spending is inflationary relative to trajectory of inflation/deflation that would otherwise exist. That’s the point. And more importantly still, what ever the arguments for fiscal stimulus relative to other policies when interest rates are zero or negative, when rates are positive like they are here then the multiplier is probably zero.

    If you track the GFC stimulus spending against RBA rates moves you can see the rates going up as the spending ramps up.

  71. .

    Now you’re merely reciting scripture from your obscure discredited heroes, Dot. Economies are by definition performing below capacity in recessions so there is no crowding out from suitable Keynesian stimulus. Saying otherwise only highlights your ideological bent.

    Answer the question monty.

    Do you think the Government ever has a costless source of funds?

    Common sense and lucidity on my part – the only ideologue banging on here is you monty. Even the ALP used to believe in paying the bills and not having the ability to pluck wealth out of thin air.

  72. Leigh Lowe

    Back to the original question …. “Is it a dodgy graph?”
    As Sinc points out there are some amplifications and slight distortion s of scale due to the way the axes are set out.
    However, if it is designed to refute the lie from the Droner that revenues have fallen (repeated on ABC News last night as fact) then it is perfectly valid.
    That question is simply one of direction which this graph perfectly illustrates.
    She says revenue has fallen. The graph illustrates she is a liar. It is not at all dodgy.

  73. Leigh Lowe

    I have to admit, reading the Cat does make me feel I am a better class of people than you lot.

    ….. which makes you precisely the sort of elitist tosser Nick Cater so effectively identifies and skewers in his book.

  74. m0nty

    Do you think the Government ever has a costless source of funds?

    Common sense and lucidity on my part

    Well no Dot, that question is silly, and is different to what we were talking about. As usual, you show no inclination to argue in good faith.

  75. m0nty

    ….. which makes you precisely the sort of elitist tosser Nick Cater so effectively identifies and skewers in his book.

    It was a joke, Joyce.

  76. I have to admit, reading the Cat does make me feel I am a better class of people than you lot.

    It’s the lamentable quality of the trolls wot does it.

    This makes positively anyone feel better without even trying.

  77. Mark

    I am surprised that no one else has commented on the whole graphs vs AGW debate.

    If it is the contention of the left, all of a sudden, that graphs need to be critically examined is Jericho and The Drum pedants going to have a look at Mann et al and graph actual temperature vs model temperature and come to the conclusion that AGW is full of shit?

    Of course the lovely segue from that is if AGW graphs are full of shit why the fuck do we even have a carbon tax? And that is just for starters.

    Me? I would love to critically examine ALL graphs we are basing public policy on and are using to compare public policy decisions/results/outcomes.

    It is a bit droll to state of course but why did Jericho stop at the graphs that aid the Labor is good story and not investigate the Penn State (self proclaimed) Nobel Laureate, Flannery and that morally bankrupt climate commission graphs that underpin the climate policy department?

    A challenge too far obviously. Now there is a moral challenge for the times.

  78. it was an insult. Ad hominem is a type of fallacious argument.

    Ad hominem, meaning “against the person” can properly refer both to personal invective—which does not invalidate a speaker’s argument, though it may be distasteful to some—and to the logical fallacy of argumentum ad hominem.

  79. .

    Answer the question monty.

    Do you think the Government ever has a costless source of funds?

    PS – I always argue in good faith.

  80. C.L.

    Deadman, thank you.

    Jarrah has never understood the concept which is why a few of us have tried to redress this deficiency for some time, alas in vain.

  81. JC

    Go ahead monster, don’t do a runner and answer the question, numbnuts

    you communist.

  82. Pedro

    Ad hom is:

    “Proposition X must be wrong because such and such is a bad head”

  83. Driftforge

    The core error – and it has been made for years by the various treasuries – is that the GFC was an artificial slowdown that would have a artificial speed up coming out the other side before settling back down on the original path.

    Rather than treating it as 2-3 years of lost growth that will never be recovered.

    For whatever reason, each year they just keep pushing back the time it will take to snap back to the original line, rather than adapting to the new circumstance.

    Give it up already.

  84. Pedro

    “Answer the question monty.”

    He did, to be fair, at 1.05pm monty said “well no, that would be silly”.

  85. m0nty

    The question is silly and Dot is trying to shift the goalposts when he’s losing, as usual.

  86. Pedro

    It’s certainly true that other questions would better expose the weakness of your assertions.

  87. m0nty

    Dot is prosecuting the case of zombie economics. His star witness can only moan and suppurate. Austerity is dead: cracked, boxed and buried. Classical economics has been shown to be a fraud for decades, the GFC is only the latest example.

    The similarities between classical economists and Marxists at this stage of their ideological lifecycles are striking. All they can both do is claim that they never really got a chance to implement their ideology in its purest sense, because any opportunities they have had to see their pet theories tried out have been abject failures. Yet still they bang on about it, safe inside their mental straitjackets.

  88. It’s times like this I miss dear old Numbers.

  89. ugh

    “Dot is prosecuting the case of zombie economics…Classical economics has been shown to be a fraud for decades”

    Quoting Quiggin (who actually has been shown to be a fraud for decades) will get you nowhere oh munted one…

  90. .

    So monty you think, at the same time, the Government does NOT have any source of costless funds, ever – but you also think that the Governmnent does not crowd out the private sector under certain circumstances – such as temporary declines in output.

    This is irrelevant. There is still a marginal effect.

  91. Pedro, your linked explanation is erroneous, confounds the ad hominen abuse with the argumentum ad hominem fallacy, and translates ad hominem misleadingly as ‘From the Latin, “against the man”.’
    Ad hominem is better translated as “against the person”; the misconception of homo as “male adult” rather than “human being” leads to some people foolishly referring to an ad feminam argument when a woman is attacked as if a woman, somehow, were not a person.

  92. Pedro

    “Pedro, your linked explanation is erroneous”

    Sure Tanya, or were you trying to make a joke?

    Monty, the liquidationists being wrong does not make you correct. Krugman is smart enough to push fiscal stimulus with some weasely evasions. Because you don’t seem to really understand the stuff you’re making the mistake of pushing simple a simple keynsianism that the smart keynsians abandoned yonks ago.

    Sensible austerity is part of the long-run solution. Mindless fiscal stimulus is not.

  93. .

    Austerity is dead: cracked, boxed and buried. Classical economics has been shown to be a fraud for decades, the GFC is only the latest example.

    Rank stupidity: austerity and laissez faire caused the GFC.

    You’re not even trying monty. You’re just phoning it in now.

  94. Empire Strikes Back

    Creosote – you claim Dot prosecutes the case of zombie economics. I’m not familiar with the Zombie School, would you mind posting some links, I’d like to know more.

  95. Pedro

    He’s not saying that, he’s saying that the post GFC world shows that recommendations of austerity as a solution to the depression in Europe are wrong and krugman is correct. he’s just not very articulate.

  96. Dan

    It’s times like this I miss dear old Numbers.

    Beetlejuice beetlejuice beetlejuice

    Anyway, Steve may be onto something here

    I don’t know. But I do know that the main graph I want to see isn’t here: one showing forecast revenue from 2009 as against the drop in received revenue that we do see from 08/09.

    Has the government used debt raising to cover the shortfall, or did they get greedy?

    The amount currently outstanding seems a bit much for five years of lousy revenue predictions

  97. .

    What amuses me is the idea that monty sees the thought that;

    the Government cannot simeltaneously: have costless funds at any time and actually has access to costless funds when output declines, is a bizzare and illogical position,

    is some sort of evil menace to society that must be derided and hunted down.

    I think monty comes from the pro insanity school of economics.

  98. Jarrah

    “can properly refer both to personal invective”

    Only if you like inventing new meanings for established concepts. The full phrase is argumentum ad hominem. There’s a clue right there. Any drift away from its meaning is due to ignorant usage begetting ignorant usage. Eventually enough people will have got it wrong for long enough that it becomes ‘right’, and ad hominem will be a synonym for insult, but not yet. Besides, what’s the point of having a fancy Latin term if it just means ‘insult’?

  99. Pedro

    Dan, the govt has been borrowing the difference between tax and expenditure. They’ve been forecasting more tax revenue than actually received and you could be forgiven for thinking that there has been deliberate lying about the forecasts so they can make political claims and cover the current increases in spending.

  100. Token

    Besides, what’s the point of having a fancy Latin term if it just means ‘insult’?

    Why do judges and barristers wear wigs?

  101. Pedro

    Jarrah, you’re arguing with nobody. Each statement on the point is a variation on the following:

    ad hom is where an argument is attacked by insulting the proponent.

  102. .

    Jarrah

    You were upset that I used the original, etymological meaning of a word once and that I didn’t go along with how it changed.

    Which is the correct way – it’s hard to tell since you are not consistent.

  103. Empire Strikes Back

    Why do judges and barristers wear wigs?

    To match the pretension of their verbiage?

  104. Dan

    Dan, the govt has been borrowing the difference between tax and expenditure. They’ve been forecasting more tax revenue than actually received and you could be forgiven for thinking that there has been deliberate lying about the forecasts so they can make political claims and cover the current increases in spending.

    Well, der, but have they borrowed above the difference between forecast and actual revenue?

  105. dd

    Only if you like inventing new meanings for established concepts. The full phrase is argumentum ad hominem. There’s a clue right there. Any drift away from its meaning is due to ignorant usage begetting ignorant usage. Eventually enough people will have got it wrong for long enough that it becomes ‘right’, and ad hominem will be a synonym for insult, but not yet. Besides, what’s the point of having a fancy Latin term if it just means ‘insult’?

    I’m sympathetic to Jarrah’s point of view here, in that why have a Ferrari if you just needed a clock radio; however, in the context of a debate or discussion, the “argument” part of argumentum ad hominem, while not stated, is implied.

    For example, let’s say someone (e.g., commenter Driftforge) makes a contribution to the debate and in response someone else (e.g., commenter m0nty) says “In real terms, you’re a moron.”

    The insult is in response to Driftforge’s argument. That’s how a normal, casual observer would interpret it. In other words, we understand that the invisible words at the start of m0nty’s outburst are “you’re wrong because…”

    But on the other hand it’s not a logical fallacy so much as an expression of contrary position. “you’re a moron” is just a colourful way of saying “I wholeheartedly reject what you said.” Not very informative, nor does it contribute much, but it’s not a fallacy per se.

  106. Only if you like inventing new meanings for established concepts.

    No, Jarrah, you are insisting that one Latin phrase must have the meaning of another longer, “full” Latin phrase.
    Ad hominem, though it may refer to the argumentum ad hominem, has a separate meaning. You might as well contend that “playing the man” may mean only “attacking an opponent on a sports-field instead of fairly attempting to secure the ball”—derived from, “playing the man, not the ball”—but may not refer to, say, “acting the part of an adult”.
    Similarly, you might as well argue, just as stupidly and in ignorance of Latin and literature, that status quo—the situation wherein”—may have the meaning only of status quo ante bellum—“the state before the war”. You might as well argue that the words sine scientia—“without knowledge”—may refer only to the motto ars nihil est sine scientia ars nihil est—“without skill, art is nothing”.
    You might as well argue that the words ad nauseam—“unto sea-sickness”—may refer only to the logical fallacy of argumentum ad nauseam.

  107. Pedro

    “Well, der, but have they borrowed above the difference between forecast and actual revenue”

    I was wondering why you asked such a seemingly dumb question. The answer depends on whether their expenditure is greater than forecast.

  108. Dan

    As it turns out, projected expenditure with the collapse in the carbon price, NDIS and Gonski creates a bit of a headache for governments well into the future.

    I’m only asking for this recent period of ALP governance. Did they borrow more than they needed? In Graph form. I should have been more clear, apologies.

    To use the yardstick of imaginary John, it’s one thing to borrow ten grand to cover a ten grand shortfall, quite another to borrow twenty grand to cover the same ten grand.

  109. Mother Hubbard's Dog

    Down as a percentage of GDP – probably, but still at about the long-term average.

    The last four years revenue has averaged 22.4% of GDP. The previous 13 years (back to 1995-96) revenue averaged 23.9% of GDP. Source: http://budget.gov.au/2012-13/content/myefo/html/13_appendix_d.htm, Table D1.

    The problem is their (or Treasury’s) crap revenue forecasting.

  110. David Brewer

    Julia says it’s like having a $10K mortgage on a $100K house, no big deal.

    But she forgets that the house always existed, and we are just comparing her stewardship with her predecessors’. When she moved in, the house was fully owned and there was a substantial nest-egg in the Future Fund. Since she arrived, she has put in pink batts that may one day burn the place down, and erected a school hall in the backyard. And she now has a mortgage, which is more like $25K than $10K if you count properly.

  111. Steve of Glasshouse

    The graph makes perfect sense when one puts urine height up a wall as the y axis and x(x) as time frame

  112. David Brewer

    BTW how about a thread on Wong’s revenue excuse that although the terms of trade are falling the dollar is stubbornly and unexpectedly high? Apparently the RBA was running this one last year. But is it still true?

    The Budget predicted a 5.75% decline in the terms of trade this fiscal year, and the MYEFO upped that to 8%. So Swannie and Wong saw a substantial terms of trade fall coming anyway. On this basis the Budget estimated that the dollar would “remain around its recent average level — a trade weighted index of around 77 and a US$ exchange rate of around 103 US cents”. Guess what the outturn is, as of today? TWI 77, Dollar 102. And the annual exchange rate figures will be within a hair’s breadth of the forecast too.

  113. BM

    Comparing net debt to a mortgage is gross financial incompetence. A mortgage is gross debt – and barring a sudden and significant drop in the value of a house, will result in zero net debt. Her claim is fundamentally incorrect, yet she gets away with it.

    Gillard is a financial illiterate, plain and simple. Swan too.

  114. BM

    Blaming austerity, which follows decades of reckless and unsustainable spending, for the ensuing economic downturn is like blaming the ground for killing you rather than the 1000 foot drop.

    And the argument seems to be that if we can just keep falling forever then everything will be okay. At some point, as Europe is finding, the pain can’t be avoided. We should be learning from it, but that won’t happen if we focus only on the hit, and not the descent.

    Meanwhile, after descending the first 100 feet, Gillard and Swan are telling us “so far so good”.

  115. Dan

    Anyway, I did some rooting around and the revenue shortfall from 2008 is about $145b and the government has borrowed $167b net or there abouts as of 2011 – 2012.

    So faced with a shortfall, they kept on spending above expected revenue.

    I think that alone is the scandalous part.

  116. Mother Hubbard's Dog

    Correction to my 8 May 6.02pm post above: the previous 13 years averaged 24.9%, not 23.9%. So the last four years have been 2.5% below the earlier average.

    In hindsight, it’s easy to say they should not have believed Treasury when they said revenue would recover to previous levels. More likely that whoever was in power would have believed it and spent accordingly.

    NB I am not a Labor supporter. I detest Gillard and consider her incompetent. But people should be criticised for their real faults, not for things they could not reasonably have predicted.

Comments are closed.