The front page story in this morning’s Australian is one more piece of evidence on the death of Keynes and the return to economic management of a kind not seen for almost a century. Its enemies have called it “austerity”, but what you are looking at is a return to a market-based approach to getting economies to work. As the headline says, Tony Abbott tells Davos: let business lead way. And this is what the Prime Minister means:
In meetings in Zurich with Switzerland’s top investors in Australia and an address to the Australian business delegation to the forum, Mr Abbott has launched a pitch for the “absolute centrality” of private business to sustainable economic growth.
Declaring that Australia will take its own actions to cut taxes, raise productivity and reduce regulation, the Prime Minister will call on other nations to make way for business and free trade. . . .
Addressing Australian business leaders, Mr Abbott said it was easy for commentators and governments to forget “the absolute centrality of successful private business to prosperity”.
“You cannot have a society, you cannot have a community and you can’t have an economy without successful private business,” Mr Abbott said.
It sounds so obvious you have to wonder why it isn’t said more often. And this is the new world we are in and I hardly think what the PM will say will fall on deaf ears. If the socialist President of France is quoting Say’s Law, you may be sure that there is a light dawning that will move us towards a kind of prosperity that has been suppressed for seventy years.
And as for the economic textbook writers of the world, if we suddenly find that the road to prosperity is made up of Y=C+I-G, there may have to be a global book burning as macroeconomic theory finds the need to start again.