Yesterday the AFR published this letter from David Johnstone, Professor of Finance at Sydney University:
It beggars belief that people still say that the government should just get out of the way. It is the job of governments to get involved; that’s what they are there for.
The government is effectively a shareholder in every company, both by the taxes it collects from their profits and the unemployment and social costs it pays when they fail.
If it requires $25 million to prop up Ardmona a bit longer, keeping those fruit trees alive and our options open, then that’s about a dollar per head of population and does not seem enough to warrant the parading of economic scriptures.
You don’t hear much from economists against this nonsense because most of the influential ones are paid by the “small government” and “no interference” believers.
And also because economics is so ad hoc, with no truly “scientific” theory of what makes economies work, either for profit alone, or for social, environmental and cultural benefits.
It’s time politicians grew out of love with simplistic economic homily. The damage done long outlasts them.
Just love the argument that government actually owns corporations because they have to pay tax. I suppose that means the government owns people because (some of us anyway) we have to pay tax too. A whole new justification for the term “Tax Slave”.
Anyway, this morning a reply from Stephen Sasse got published:
Professor Johnstone must live at the top of an ivory tower. To assert that the tax collector is a shareholder; that it “is the job of governments to get involved” in the creation of wealth? (“’No interference’ advocates out of touch, AFR February 3)
Can I suggest that he acquaint himself with some basic principles of economics – Hayek’s The Fatal Conceit might be a good start. He might then attend some history lectures over in the arts faculty. Modern Russian History 1925-1933 should be a good practical introduction to the abject of failure of planned economies.