Going for growth: set a target

Now I am not a big fan of the international gabfest, producing vacuous and gobbledygooky communiques.  What is the point?

But it seems that J.B. Hockey is really getting into it all, telling other G20 countries that they must set a target for global growth.  What the?  Why?

The implication seems to be that all governments should continue to spend taxpayer funds, present and future, to create some sugar hit to record growth.  Really?  Really?

My feeling with these G20 thingies is that the only sensible subjects for discussion related to issues with clear inter-country spillovers.  All other issues are up to the individual countries to pursue – eg. infrastructure.

Here’s a grab from this morning’s news:

AUSTRALIA is negotiating a landmark commitment from the world’s biggest economies to set a hard target for global growth as it sets out reforms to labour markets, tax rules and infrastructure spending at an international summit this weekend.

Joe Hockey revealed the plan after talks with his global counterparts as he warned that all major nations had to “rev up the reform engine” to lift growth above the 3.7 per cent forecast for this year.

The Treasurer told The Australian that the reform agenda was crucial to the federal budget, warning it would be “reckless” to cut government spending too hard in May when the nation languished below its trend growth rate.

While the global economy was looking more positive than at the end of last year, Mr Hockey declared that “complacency is now our greatest enemy” and it was time for Australia and others to endorse reforms at this weekend’s meeting of finance ministers and central bankers from Group of 20 nations in Sydney.

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12 Responses to Going for growth: set a target

  1. Squirrel

    Almost Keating-esque, isn’t it.

  2. Token

    It is part of the theatre of these gab fests. Each country making statements which the media of the other countries ignore.

    Has anyone tallied up all of the “vision statements” made by the leaders before such meetings and married them against the results?

  3. Milton Von Smith

    Setting targets for growth is about as silly as you can get.

    Even sillier than Kevin Rudd’s productivity growth targets.

    The stupidity of the idea is exceeded only by this statement by Hockey:

    “And in Australia we can cut expenditure all you want but ultimately the best repair job on the budget is going to come from stronger economic growth and better revenue.”

    No. No. No. No. No. No. You’re the Australian Treasurer. Your job is to cut spending. If you’re not cutting spending, you’re part of the problem.

  4. Talleyrand

    Set a target for the reduction in size of government. That would do more to grow economies than any delinquent prime pumping by all the reckless and feckless G20 treasurers, finance ministers and sundry spendthrifts.

  5. Ant

    Imagine how these international gabfests would turn out if the trough snuffling pigs that attended had to PAY FOR THEIR OWN JUNKET rather than sucking it from taxpayers.

    I have flown quite a bit, but I never travelled first or business class, although it’s pretty clear that I’ve been paying plenty for others to enjoy the privilege.

  6. rickw

    In the end, isn’t economic growth underpinned by technology and its application in the production of goods and services?

    If so, how can anyone set a growth target?

  7. Mel Gibson

    Essentially, the proximate financial crisis and the deeper growth crisis of civilization are connected in two ways. Interest-based debt-money compels economic growth, and a debt crisis is a symptom that shows up whenever growth slows.

    The present crisis is the final stage of what began in the 1930s. Successive solutions to the fundamental problem of keeping pace with money that expands with the rate of interest have been applied, and exhausted. The first effective solution was war, a state that has been permanent since 1940.

    Unfortunately, or rather fortunately, nuclear weapons and a shift in human consciousness have limited the solution of endless military escalation. War between the great powers is no longer possible. Other solutions — globalization, technology-enabled development of new goods and services to replace human functions never before commoditized, technology-enabled plunder of natural resources once off limits, and finally financial autocannibalism — have similarly run their course. Unless there are realms of wealth I have not considered, and new depths of poverty, misery, and alienation to which we might plunge, the inevitable cannot be delayed much longer.

    The credit bubble that is blamed as the source of our current economic woes was not a cause of them at all, but only a symptom. When returns on capital investment began falling in the early 1970s, capital began a desperate search for other ways to maintain its expansion. When each bubble popped — commodities in the late 1970s, S&L real estate investments in the 1980s, the dotcom stocks in the 1990s, and real estate and financial derivatives in the 2000s — capital immediately moved on to the next, maintaining an illusion of economic expansion. But the real economy was stagnating. There were not enough needs to meet the overcapacity of production, not enough social and natural capital left to convert into money.

    To maintain the exponential growth of money, either the volume of goods and services must be able to keep pace with it, or imperialism and war must be able to escalate indefinitely. All have reached their limit. There is nowhere to turn.

    Today, the impasse in our ability to convert nature into commodities and relationships into services is not temporary. There is little more we can convert. Technological progress and refinements to industrial methods will not help us take more fish from the seas — the fish are mostly gone. It will not help us increase the timber harvest — the forests are already stressed to capacity. It will not allow us to pump more oil — the reserves are drying up. We cannot expand the service sector — there are hardly any things we do for each other that we don’t pay for already. There is no more room for economic growth as we have known it; that is, no more room for the conversion of life and the world into money. Therefore, even if we follow the more radical policy prescriptions from the left, hoping by an annulment of debts and a redistribution of income to ignite renewed economic growth, we can only succeed in depleting what remains of our divine bequest of nature, culture, and community. At best, economic stimulus will allow a modest, short-lived expansion as the functions that were demonetized during the recession are remonetized. For example, because of the economic situation, some friends and I cover for each other’s child care needs, whereas in prosperous times we might have sent our kids to preschool. Our reciprocity represents an opportunity for economic growth: what we do for each other freely can be converted into monetized services. Generalized to the whole society, this is only an opportunity to grow back to where we were before, at which point the same crisis will emerge again. “Shrink in order to grow,” the essence of war and deflation, is only effective, and decreasingly so, as a holding action while new realms of unmonetized social and natural capital are accessed.


  8. Milton Von Smith

    Mel Gibson: Don’t give up our day job, unless you are an economist.

  9. Jim Rose

    trend growth in the USA over the 20th century was 1.9% according to the last ed prescott estimate I saw. hard to growth fast than that.

    australia has been a stable 20% less rich that the US since 1956. neither catching-up or falling behind.

  10. Andrew

    Maybe it’s code. Go for growth – that’s the excuse for reforms that are, after all, supposed to increase productivity and generate additional growth right? He even said “reform” somewhere in that speech.

    It’s a setup for dumping the carbon fraud destroying the EAU.

  11. JohnA

    The Treasurer told The Australian that the reform agenda was crucial to the federal budget, warning it would be “reckless” to cut government spending too hard in May when the nation languished below its trend growth rate.

    NO, NO, NO, Mr Treasurer! This reckless spending must stop!

  12. Alphonse

    No no no no no Milton. It’s about the debt to GDP ratio and not worsening it with procyclical fiscal policy. Just compare the results of Osborne in the UK and Swan in Aus.

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