Guest Post: Fisky – Was Thatcher a pinko*

Right-wing governments are falling into the austerity trap of raising taxes to cut their predecessors’ deficits, harming growth and jobs. What is really needed is a growth-first, supply-side solution and a resounding ‘No!’ to the politics of austerity.

Ronald Reagan and Margaret Thatcher have gone down in history as the two greatest right-wing leaders of the free world since WWII, and every right-wing activist will have read at least one biography about the Gipper or the Iron Lady. Historians can almost run Reagan-Thatcher together as a single political entity that embodied the strategic/economic renewal of the West in the 80s, and the cultural confidence that went along with it. However, that tends to obscure the very real differences between the two leaders, and I think aspects of Thatcherism deserve critical scrutiny.

Thatcher was the original austerian, a hard-line monetarist and deficit-cutter, and an argument could be made that her first-term macro-economic policies caused political damage to her far more successful deregulation/privatisation agenda that followed. From 1979-1983, taxes rocketed from 33.1 to 38.2% of GDP, an astonishing increase that, along with other measures, knocked the stuffing out of the economy and caused the number of unemployed to soar over 3 million by 1983. The woman who campaigned against long dole queues in 1979 on the slogan “Labour isn’t working” ironically left Britain with an unemployment rate 2% higher than when she took office 11 years earlier. This is part of the reason that the Tories are now unelectable in Northern England and Scotland, areas which bore the worst effects of 1980s austerity.

Reagan’s strategy was almost diametrically opposite. Influenced by supply-siders like Art Laffer, the Gipper believed that growth and low inflation were reconcilable so long as supply-side policies were adopted via slashing taxes and regulations first, with initial and temporary demand side measures (interest rate rises) being applied in order to kill off inflation. Reagan cut taxes from 19.2% to 17.3% of GDP in his first two budgets and kick-started a defense build-up without much care for the deficit. Accordingly, the US came out of the recession of 1981-2 (caused by the Fed’s interest rate hikes) just as quickly as it went in, and net 15-16 million jobs were created during Reagan’s remaining six years, a remarkable record.

In this, there are some important lessons. The economic lesson is that austerity is no good economically, and a political trap for right-wing governments. In an entrenched low-growth, anti-business environment, politicians need to focus on the immediate problem at hand by repealing the low-growth policies that are holding back business, rather than the secondary problem which is the deficit. Taxes must come down, impediments to investment must be abolished, and unnecessary labour market regulations should be scrapped. In short, we must legalise prosperity first, and worry about fiscal retrenchment later. Thatcher’s approach caused unnecessary social strife because her real supply-side measures came later in the game and, by then, millions of people had already been made irrelevant to the British economy. It could be argued that the “chav” culture of entrenched welfare dependence and hooliganism is very much a product of Thatcherism.

Unfortunately, the Abbott government is repeating the errors of Thatcher although on a far less drastic scale. Firstly, there are unnecessary spending cuts that are hitting the weak instead of the strong and powerful enemies of the government (e.g. highly-paid ABC propagandists, and human rights commissioners whose job description is mainly to restrict liberties), without having any significant impact on the deficit. Secondly, there are tax hikes on the very skilled workers that Australia needs to attract for the country to prosper. No one should be surprised if the net revenue take from the high-income tax hike will be zero or even negative. Third, the real supply-side measures that this country needs are still lacking. The “develop the North” mantra we heard during last year’s campaign seems to have gone nowhere. Freeing up land, cutting penalty rates, and yes, slashing taxes across the board, should all be the first business of the government prior to any reductions in welfare entitlements. If the government are not sure where to start, they could simply issue a survey to a couple thousand small businesses across different sectors asking them how much time they are wasting on compliance issues, and in what ways.

The politics of austerity, where conservative governments risk short-to-medium term recessions in order to clean up the fiscal mess of their Left-wing predecessors, should be abandoned. Labor never take responsibility for their irresponsible spending and it is maddening that the Liberals always get suckered into bearing the political costs of being the “mean party”, the tax-hikers and the penny-pinchers. What is needed instead is an unapologetically belt-loosening pro-growth agenda of the kind that carried Reagan to the biggest electoral landslide since WWII, the supply-side economic policies to match, and a simple slogan to knit the whole thing together – such as “Legalise Growth!” or, better still, a resounding “No to Austerity!

*with apologies to the late P.P. McGuinness

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121 Responses to Guest Post: Fisky – Was Thatcher a pinko*

  1. Token

    Is that headline your way to teach the Cat’s trolls how to effectively troll?

  2. .

    FISK

    Shut up and run for office.

    This is utterly correct. The best response to six years of ALP-Greens rule is to cut spending, cut taxes, pay off the deficit and gut their programmes and institutions. Starve the beast, as David Leyonhjelm would say.

    If they want to fund more inane projects and policies, let them re-legislate hated taxes people currently passively accept. A real poison pill forn the ALP and Greens would be to introduce a negative CIR so the public could strike down decidedly bad laws.

  3. .

    What is needed instead is an unapologetically belt-loosening pro-growth agenda of the kind that carried Reagan to the biggest electoral landslide since WWII

    Brilliant advertising:

    https://www.youtube.com/watch?v=EU-IBF8nwSY

  4. Infidel Tiger

    “Go For Growth! Now available in 25mg tablets.”

  5. Rabz

    What is needed instead is an unapologetically belt-loosening pro-growth agenda of the kind that carried Reagan to the biggest electoral landslide since WWII, the supply-side economic policies to match

    Could you honestly envision this current bunch of bedwetting socialist mediocrities implementing such policies?

    Much easier to jack up taxes and spending as far as they’re concerned.

  6. Token

    This is part of the reason that the Tories are now unelectable in Northern England and Scotland, areas which bore the worst effects of 1980s austerity.

    There was no way to avoid the mine closures.

    A lot of work would need to occur tochange the culture in the UK to overcome the resistance to moving to another location in search of jobs.

  7. blogstrop

    Just don’t vote Labor or Green. Ever.

  8. Infidel Tiger

    Cheaper energy and mass sackings of bureaucrats and their associated regulatory burden would do more to improve our economic circumstances than any other measures.

    Although I’d personally trade the lot for a top tax rate of 20%.

  9. struth

    Beautifully said. ….Absolutely correct and so blatantly obvious you wonder how dumb and piss weak this lot is. Amazing when you consider how many pre election speeches Abbott gave declaring his belief in this proven approach.

  10. Nato

    Yes, politicians all start with the opinion that gov’t can do good, when it can only do harm. The biggest, baddest social predator available that should only be tasked to harm those social predators intent on harming the peaceful citizens.

    The root cause of welfare dependence is welfare. Who would argue we abolish the safety net?

    Your ideas are good, but unelectable.

  11. Nato

    I heard that the ‘unelectable in the north’ bit is pulling the conservatives behind the ‘yes’ vote for independent Scotland. Tories lose 2 seats, Lib Dems 1, and Labour something like 42.

  12. .

    Your ideas are good, but unelectable.

    HOW MANY FUCKING TIMES IS THIS BULLSHIT GOING TO BE ACCEPTED ON THIS BLOG?!

    FFS.

  13. Token

    Excellent post all up.

  14. Infidel Tiger

    Down with Austerity!

    Yes! Any deprivation that cuts raises spending from $407,000,000,000 to $470,000,000,000 in 3 years is a living hell!

  15. Combine_Dave

    Yes! Any deprivation that cuts raises spending from $407,000,000,000 to $470,000,000,000 in 3 years is a living hell!

    When’s Morrison gonna roll Abbott?

  16. Max

    Politicians need to focus on the immediate problem at hand by repealing the low-growth policies that are holding back business, rather than the secondary problem which is the deficit. Taxes must come down, impediments to investment must be abolished, and unnecessary labour market regulations should be scrapped. In short, we must legalise prosperity first, and worry about fiscal retrenchment later.

    This is Says law in action. First you must produce in order to consume (or in this example save and pay down debt)

  17. Tim Neilson

    I agree with your criticism of Abbott and the rest of the invertebrates in our current government. However your criticism of Thatcher is at least over-simplistic. Thatcher slashed top tax rates in the UK, and tax went up as a percentage of GDP only because people actually started doing things and generating revenue on which they paid Thatcher’s top rates – i.e. 50% top rate generating real tax increases tax/GDP ratios compared with 98% theoretical top rate generating nothing. As for the unemployment, the UK was being destroyed by union-enforced overstaffing especially though not solely in the public sector – there were far more real jobs at the end of Thatcher’s run as PM than at the start.

  18. Robert Blair

    Calm down Dot.

    The punters around here don’t mind the swearing, but all-caps is offensive to them …

  19. Robert Blair

    Nato:

    Your ideas are good, but unelectable

    I don’t agree. Very electable stuff, with the right party and politicians behind it.

    Of course, we don’t have anything like that available here in the Lucky Country.

  20. Jannie

    The Greens are opposed to economic growth, their goal is to deindustrialise, and to fund this through investing in black holes and borrowing and taxing prosperity to death. They have no intention of or ability to repay the debts they incur. Debt default will help them achieve their goals. Our creditors however may find it necessary to appropriate suitable economic assets to recover their outlays.

  21. Fisky

    “unelectable”! We’ve seen the alternative, higher taxes and more expensive energy, which is toxic.

  22. tgs

    Your ideas are good, but unelectable

    Not true.

  23. Bear Necessities

    But Martin Parkinson says no.

  24. Infidel Tiger

    I agree with your criticism of Abbott and the rest of the invertebrates in our current government. However your criticism of Thatcher is at least over-simplistic. Thatcher slashed top tax rates in the UK, and tax went up as a percentage of GDP only because people actually started doing things and generating revenue on which they paid

    Yes, Fisky has used a common lefty trick – conflating tax revenues with tax rates.

  25. Fisky

    Tim – tax % rose all the way through the recession, not just after. VAT hikes were the likely culprit because while people might stop earning in a recession, they won’t stop spending.

  26. rickw

    A great article, blindingly obvious, both from a commonsense and historical perspective, and yet what do the Libs do?

    The Libs really are cretins, they have literally had years to work behind the scenes to develop a plan, it was blindingly obvious that:

    - Labor would rack up a massive debt and generally leave a trail of economic destruction.
    - Liberals would almost certainly win the next election.

    Despite these obvious facts, they come up with complete rubbish that pisses off most of the people who voted for them??

  27. Fisky

    Tim – the tax % rose all the way through the recession due to the VAT hikes, not just after ’82. While people may stop earning in recession, they won’t stop spending. In any case, the state should NEVER grow in a recession for any reason.

  28. Slayer of Memes

    Cutting edge analysis of Fisky’s article has already been posted….

    Regular Catallaxy Files commenter Fisky – a combative chap who is nonetheless prone to sudden brain farts like his panicked Malcolm Turnbull spruik – posts today in praise of Reagan and in criticism of Thatcher, re their economic legacies.

    The politics of austerity, where conservative governments risk short-to-medium term recessions in order to clean up the fiscal mess of their Left-wing predecessors, should be abandoned. Labor never take responsibility for their irresponsible spending and it is maddening that the Liberals always get suckered into bearing the political costs of being the “mean party”, the tax-hikers and the penny-pinchers. What is needed instead is an unapologetically belt-loosening pro-growth agenda of the kind that carried Reagan to the biggest electoral landslide since WWII, the supply-side economic policies to match, and a simple slogan to knit the whole thing together – such as “Legalise Growth!” or, better still, a resounding “No to Austerity!”

    Translated, Fisky is calling for deficits to blow out like they did under Reagan, fuelled in an engineered bubble of Keynesian pump priming to magic up jobs in the public sector regardless of cost benefit analyses, and “worry about fiscal retrenchment later”. US government debt as a share of GDP increased from 26.2% in 1980 to 40.9% in 1988, with deficits of a proportional size not seen since WW2. In Reagan’s case, the deficit paid for military build up that did very little for the regular domestic economy. In the case of Australia, where public-debt-to-GDP is still below 15%… well, there are plans for a true NBN lying around, but maybe Fisky wants to cover the Arafura Sea with brand new additions to the OPSOB fleet to enforce Rudd’s wildly successful PNG solution?

    Joe Hockey is already doing what Fisky wants (and what Reagan did) on the spending side as part of the Australian bipartisan commitment to Keynesianism. Many, many billions of dollars are being poured into roads and medical research, not to mention many hundreds of millions for fighter planes. Hockey maintains some level of decorum on the revenue side, though, and he’s not likely to make the same mistakes that Reagan did in kickstarting a generational change in inequality by cutting taxes on those who can most afford it. Hockey will wait it out for bracket creep to inexorably shore up the structural revenue shortfall that happened under Labor, as a responsible Treasurer should.

    Fisky is the sort of cheerfully dumb character whom it would be fun to have a beer with and talk a load of old toot, but you’d be seriously worried if he came home with your daughter. Hilarious that he is what passes for an intellectual over at the Cat, because the usual suspects in the comments over there don’t even twig that he’s calling for a Keynesian spending blowout and have been cheering loudly for leftist policies that even Krugman would think fiscally irresponsible.

    If there’s any inheritor of the Reagan legacy in Australian federal politics at the moment, it seems to be Clive Palmer with his populist, responsibility-free calls for lower taxes and higher spending. Perhaps Fisky has jumped ship yet again?

    And one comment in reply so far:

    Homer PaxtonJune 3, 2014 at 3:31 PM

    Reagan also cut taxes and then when tax revenues didn’t rise as expected was dumbfounded. David Stockman wrote about these lies some time ago.
    It is NOT Keynesianism to use active fiscal policy when monetary policy is working.

    they have never been all that bright on fiscal policy over there. Just remember Samuel J and Sinclair both proclaimed the most austere budget we will ever see expansionary. They have never since talked about the stance of fiscal policy in the budget!
    We really should not forget our mad mate Katesy who said Europe was using Keynesian policy to boost the economy when they were doing the opposite or in the USA where Obama is actually detracting from growth.

    Thriving intellectuals over there.

    You’ve been told Fisky…

  29. Fisky

    It’s worth remembering that m0nty wanted the top tax rate to kick in at 60k – he’s the worst austerian of the lot.

  30. .

    Yes, the only responsible thing we can do is spend more and then raise taxes. Thanks Homer. You really earnt that MBA.

  31. Percy

    The most pressing question is – “Slayer, what were you thinking going to Monster’s blog?”

  32. Slayer of Memes

    Percy, I plead boredom (plus it popped up on my Twitter list…)

  33. .

    Fisky
    #1331591, posted on June 3, 2014 at 4:24 pm
    It’s worth remembering that m0nty wanted the top tax rate to kick in at 60k – he’s the worst austerian of the lot.

    monty wanted average wage earners and some of those below them to pay the highest tax rate.

    He is an economically illiterate misanthrope.

    The average wage was $72,800 in 2013.

  34. nerblnob

    I heard that the ‘unelectable in the north’ bit is pulling the conservatives behind the ‘yes’ vote for independent Scotland.

    I presume you mean conservatives in England, who have no say in it.

    Fisky is right about the VAT and certainly x100 about the overbearing compliances strangling Australian businesses and the suicidal energy taxes on what should be Australia’s biggest competitive advantage.

  35. Fisky

    Clarification – this article does not in any way endorse the pseudo-”anti-austerity” movement in Europe which is really pro-austerity. The true definition of austerity is “any government policy that reduces private sector activity”, not just “spending cuts”. Increasing spending but still keeping taxes high (not to mention raising Green taxes and energy restrictions) has nothing to do with “anti-austerity” and is, in actual fact, PRO-austerity.

    Ironically, some of the loudest pseudo-opponents of austerity were actually pro-austerity before the GFC, and labelled themselves as such.

    http://www.theweek.co.uk/politics/uk-austerity/10585/austerity-hypocrites-have-no-right-attack-osborne

    These austerity hypocrites have short memories. This week, the Guardian’s George Monbiot wrote an angry piece about the Tory-led cuts agenda, claiming that it will help the rich and hurt the rest.

    “When we stagger out of our shelters to assess the damage, we’ll discover that we have emerged into a different world, run for their benefit, not ours”, he said.

    This is the same Monbiot who wrote a piece in 2007 titled ‘Bring on the recession’.

    “I hope that the recession now being forecast by some economists materialises”, he said, because only a recession could give us “the time we need to prevent runaway climate change”.

    A recession would hurt poor people, he acknowledged – but that was a price worth paying to halt out-of-control economic growth.

    Inspired by Monbiot, in 2008 some deep greens kick-started a campaign called Riot 4 Austerity – which says it all.

    Their reactionary demand, dolled up in radical garb, was for a 90 per cent cut in carbon emissions – a move which would have a far more devastating impact on people’s daily lives than any of the slashes Osborne has come up with.

    In 2008, the Independent’s green-tinted columnist Johann Hari called on the government to enforce wartime-style rationing in order to save the planet from almost certain fiery doom.

    “Just as the government in the Second World War did not ask people to eat less voluntarily, governments today cannot ask us to burn fewer greenhouse gases voluntarily”, said Hari. No, it must “force us all” to live more frugally and sensibly.

    Yesterday, the Independent headed its coverage of Osborne’s big day ‘Axe Wednesday’ and carried a cartoon of the Chancellor as Edward Scissorhands, cutting all around him.

    Elsewhere in recent years, Oliver James, the lefty psychologist beloved of the liberal press, has diagnosed Britons as suffering from ‘Affluenza’.

    That is, our desire for “stuff” – nice cars, big houses, fast food – is apparently making us mentally ill and the only solution is to learn to live with less.

    In 2008 and 2009 there was unadulterated recession porn in the broadsheet papers, as well-to-do writers said there would be an upside to the downturn: people would become poorer but happier.

    Writing in the Times in 2008, the English-Nigerian poet Ben Okri said recession would help us to develop a “new social consciousness”, adding: “Material success has brought us to a strange spiritual and moral bankruptcy”.

    In the Sunday Times, India Knight wrote: “Aah, what a relief the boom has turned to bust”. The recession, she argued, had “an especially sparkling silver lining” – that is, it would force us to be thrifty.

  36. Infidel Tiger

    All i took from Monty’s ahistorical nonsense was:

    Monty would be upset if Fisky came home with his daughter.

  37. Rabz

    A recession would hurt poor people, he (Moonbat) acknowledged – but that was a price worth paying to halt out-of-control economic growth

    Moonbat of course, being of the nomenklatura, so no ‘austerity’ for him.

    Insane totalitarian hypocrites.

  38. .

    Insane totalitarian hypocrites.

    Correct.

  39. Fisky

    Here is a video showing the world’s leading proponents of austerity enjoying a lavish buffet and piss-up at the Cancun climate summit in 2010. The purpose of their meeting was to plan ways to impose austerity on the rest of the world. But no austerity for them, as you can see in the clip!

    https://www.youtube.com/watch?v=q83CQ_7CGCg

  40. Oh come on

    Starve the beast, as David Leyonhjelm would say.

    Reagan was quoting Leyonhjelm? Who knew? That’s something to brag about down the pub.

    Great article, Fisky. The only problem is that it’s about three years too late to be of any use for the current mob. Their principle line of attack against Gillard-Rudd locked them into an “austerity” approach when they subsequently won office. They couldn’t have broken RGR’s balls about budget deficits and fiscal irresponsibility (quite successfully, too), only to run a series of even more massive deficits when in power. They would have had to have adopted a completely different strategy in prosecuting the Gillard/Rudd governments immediately after Abbott bumped off Turnbull. A strategy built around something like Fraser’s 1975 campaign (Turn On The Lights, Australia) would have been ideal.

    Sans Fraser’s policies, of course.

  41. Oh come on

    Hahaha m0nty’s one regular commenter is Homer Paxton? LOL

  42. Oh come on

    Tells you all you need to know when m0nty sneers at the intellectual calibre of…well just about any regular non-trolling Cat contributor.

  43. Fisky

    That’s all true – but Abbott’s message would have been arguably MORE coherent if he had framed his attack against the government in terms of “legalising growth” – after all, that’s why he was opposing the carbon tax. And he could still campaign against “ending the waste” while protecting entitlements at the same time.

  44. Senile Old Guy

    The Greens are opposed to economic growth, their goal is to deindustrialise, and to fund this through investing in black holes and borrowing and taxing prosperity to death.

    Of course. The CLP up here has recently decided to stop funding The Environment Centre. (Following on from Morrison cutting funding for the RAC, since it spent its time criticising the government.)

    The ALP, of course, got the TEC director, Dr Stuart Blanch to discuss the situation. Dr Blanch (for a doctor he is) waxed lyrical on the “value” of the TEC. In the entire (lengthy) time I have been here, I have never heard the TEC come down in favour of any significant development. Their default, and in fact only, position is “no”.

  45. Fisky

    Also, to those who think there is an electoral problem with what I’ve proposed (forget the current mob – I think that ship has probably sailed), remember there is a huge constituency for Right-wing anti-austerity economics. After all, that’s why Palmer has been able to do so well.

  46. Oh come on

    Considering the points raised in your article, it’s clear Abbott’s electoral strategy was flawed from the get-go – not in the sense that it wouldn’t get him elected, because it clearly wasn’t flawed in that regard – moreso the unfortunate policy stances it forced him to adopt after being elected.

  47. Oh come on

    I don’t think you even need to be explicitly anti-austerity – just be consistently optimistic about the future, carry on about how the dark Labor years are behind us etc. Turn on the lights, Australia!

  48. Fisky

    Abbott could still have focussed on the “end the waste” angle even without promising austerity. There was a minefield of stupid policies to take aim at, which Abbott could have promised to abolish and return in the form of tax cuts.

  49. Oh come on

    Yes, he could have. Instead he’s pouring cold water over everything.

  50. remember there is a huge constituency for Right-wing anti-austerity economics. After all, that’s why Palmer has been able to do so well.

    Otherwise known as the ‘cuts for everyone but me’ school of thinking, which is indistinguishable from the left wing anti-austerity economics gang by their predilection for talking about ‘bloated bureaucracy’ and ‘public service fat cats’ and ‘immigrants ripping off welfare’.

    I think, anyway.

  51. SO sorry – for ‘indistinguishable’ read ‘distinguishable’

  52. Fisky

    Otherwise known as the ‘cuts for everyone but me’ school of thinking, which is indistinguishable from the left wing anti-austerity economics gang by their predilection for talking about ‘bloated bureaucracy’ and ‘public service fat cats’ and ‘immigrants ripping off welfare’.

    It’s all too easy for charlatans like Palmer to disorient the constituency. But a clear communicator and far-sighted strategist like Reagan showed that it could be harnessed.

  53. a clear communicator and far-sighted strategist

    Abbott’s not shaping up well. Mind you, Palmer’s attacking Credlin for a reason.

  54. James B

    Great post. Abbott’s doing all Labor’s work for them, by PAYING FOR THEIR FUCKING PROGRAMS. Even raising taxes to do so.

  55. Infidel Tiger

    You know, Paul, Reagan proved that deficits don’t matter. We won the mid-term elections, this is our due.

    Dick Cheney, Fiskian.

  56. .

    Reagan was quoting Leyonhjelm? Who knew? That’s something to brag about down the pub.

    If Reagan is still saying it, I’d like to know too how to cheat death…

  57. C.L.

    Once again, Fisk surrenders to the left.

    First on social policy, now on economics.

    Don’t be fooled. This is just tarted up Romneysian Turnbullianism.

    There has to be more to politics than imitating the successful corruption of the left.

    Oh wait, there is. It’s called principle and this good fight can never be shirked.

  58. Fisky

    This is just tarted up Romneysian Turnbullianism.

    Otherwise known as Reaganism.

    ????

  59. Infidel Tiger

    Don’t be too ahrsh on Fisky.

    Ever since SfB and mOnty got drummed out of Dodge, Sinc has had a lot of trouble generating comments that didn’t involve Thermomixing illegal immigrants who want ecstasy legalised. Fisk is his go to guy to fire up discussion. He’s a false flag, kite flyer for the right.

  60. C.L.

    Mr Fisk, I knew Ronald Reagan.

    Ronald Reagan was a friend of mine.

    Mr Fisk, you’re no Ronald Reagan.

  61. Fisky

    CL, if you’re here to promote the failed macro policies of Thatcher, you should get your own thread. This is a Reaganites-only gig.

  62. JC

    Fisky

    I love you like a red headed stepchild, which you know. But dude ya got give up Turnbull. After the dinner with Clive Mr. Creosote -Palmer and the pic of him holding hands with Mark Scott and the rest of those leftwing arseholes, he’s fucking toxic. I’d rather swallow a large chunk of spent plutonium than support him.

  63. C.L.

    Fisk, your thesis is bunkum and it gives me no joy to point this out.

    Neither Turnbull or Abbott nor Christopher Pyne is at war with the greatest tyranny in human history. Reagan had to marry disparate philosophies for a unique set of historical circumstances.

  64. JC

    And Fisky… yes accuse me of supporting Turnbull in the past, but not anymore. He’s fucking dead as far as I’m concerned.

  65. JC

    It’s all too easy for charlatans like Palmer to disorient the constituency. But a clear communicator and far-sighted strategist like Reagan showed that it could be harnessed.

    Fisky, that’s true\, but I think our system is different. Our PM is not a president.

  66. Fisky

    I love you like a red headed stepchild, which you know. But dude ya got give up Turnbull.

    Huh? I dropped him ages ago.

    Fisk, your thesis is bunkum and it gives me no joy to point this out.

    Except it is borne out by the economic data.

    There might be a good counter argument that Australia is in a weaker position vis-a-vis the markets and must keep a closer eye on the deficit than the US needs to, but that doesn’t change the fact that we should ALWAYS be searching for supply-side solutions to low growth before we look elsewhere.

    ALWAYS.

  67. JC

    Oh Okay… I think CL suggested something like, but I’m wrong.

  68. .

    C.L. was mates with Reagan and JC went to dinner parties with Thatcher?

    Cop that Homer Paxton, you corridor power walker.

    You would have never sailed with Bob Mossbacher, only Mal Colston.

  69. JC

    …the supply-side economic policies to match, and a simple slogan to knit the whole thing together – such as “Legalise Growth!” or, better still, a resounding “No to Austerity!”

    You can do all that by simply freezing spending at today’s nominal dollar value and then go for supply side in a huge way.

  70. JC

    C.L. was mates with Reagan and JC went to dinner parties with Thatcher?

    I did once have a dinner with Maggie, Dot. True.

    As you know I had a raging argument with her.

    You made me take a look at the pic I had with her just now and I must say I cut a dashing figure beside the old girl. She must have been really excited she was in a pic with me as I can tell from the expression on her face.

  71. This is a very good article.

    In short, we must legalise prosperity first, and worry about fiscal retrenchment later.

    I like it.
    As you say, the right has been suckered into being the ‘mean side’, rather than the prosperity side.

  72. Infidel Tiger

    Getting the supply side humming, cutting regulations to the bone, lowering taxes like a mofo and then retrenching 250,000 public servants in one day is probably what heaven is like.

  73. Percy

    Getting the supply side humming, cutting regulations to the bone, lowering taxes like a mofo and then retrenching 250,000 public servants in one day is probably what heaven is like.

    Gold

  74. Oh come on

    Otherwise known as the ‘cuts for everyone but me’ school of thinking,

    What, like across-the-board income tax cuts and competing with the Irish on a company tax rate? Now *that’s* how you blow the budget for the benefit of all.

  75. Oh come on

    If Reagan is still saying it, I’d like to know too how to cheat death…

    I see. In that case, please preface any memorable, elegant quote from a dead guy with ‘As OCO would say…’

  76. C.L.

    Look, Fisk is being logical according to a ruthless political calculus.

    Labor gets in, wrecks the joint fiscally, bankrolls two or three terms with free stuff, then gets thrown out. In march the Liberals, proudly promising to set things to fiscal rights. The public takes its medicine for about two or three terms, then throws them out for more free stuff. It seems like a weird sort of even Stevens, except that in budgetary terms (not to mention tangential social policy terms), leftism is ratcheted in far more than rectitude, rationality or liberty are. So Labor wins the long game. A corollary, by definition – and this seems to be borne out by recent psephological trends both here and in the US – is that the window available for the Liberals/Republicans is becoming smaller and briefer with each successive cycle of the game. Fisk is essentially arguing that it’s time to confound the left by imitating them. No.

  77. Fisky

    Fisk is essentially arguing that it’s time to confound the left by imitating them. No.

    The country’s changed, dude. Howard still had the pre-Boomer generation kicking around in their millions, the types that grew up clipping coupons or growing their own food (because they couldn’t afford to buy it at the shops). They were the ones that would call up talkback radio screaming about dole bludgers and wasteful spending back in the 90s and provided him the electoral support for cuts. And guess what? Most of them are dead now.

    There is no constituency for austerity anymore, not until we experience another Great Depression. So that needs to be taken into account, and the only model that does so is the Art Laffer Supply Side model.

  78. C.L.

    But Fisk, even your use of the scare-word “austerity” is deplorable.

    That’s just the word leftists use to describe what was known as “economic rationalism” back in Peter Walsh’s day. It was saleable then and it still is if your principal has balls and brains.

    Unfortunately, nobody in the Liberal Party has balls and brains.

  79. Fisky

    Actually, I’m delighted that austerity is a boo-word. Because what it really means is “anti-growth”. It’s simply a matter of adjusting the terms slightly, and the Left become the party of austerity, not the Right.

  80. Fisk is essentially arguing that it’s time to confound the left by imitating them.

    Fair enough. But it is a very persuasive article.

    The problem with Austerity is that – and this is something that in my view is not sufficiently acknowledged by ‘right wing’ economists – it really does cause hardship. To take a simple analogy, if you’re living off a credit card, you can live the high life. Cutting back spending to pay off the credit card really does mean that standard of living drops in the short term. Yes, sure, the credit card existence was headed for ruin, but that’s not going to show up in month-to-month charts and lovely estimates which economists and politicians love. The discontinuity is in the future, and big spending progressives run a nice line in denial that the risk is that great.

    Cutbacks have to be combined with pro-wealth policies, as Fisk puts it, “legalising prosperity.” This is why the Abbott’s government move against unemployed youth is a miscalculation. Unemployed youth can’t find jobs because employers must, by law, pay them a very high wage. Rather than government run ‘busy-work’ programs that won’t teach them anything, why not drop their wage to zero, and ‘work experience (in the form of low paid positions) will blossom everywhere. For free. For no additional work from the government except getting out of the way.

    So that would be an example of a combination of austerity (ie cutting back welfare) and prosperity (cutting back minimum youth wage). In fact, you could do the prosperity move first as Fisk suggests and then introduce the austerity after the prosperity kicks in. but that’s not what Abbott and Hockey have done. They’ve done one without the other. Why? That’s a subject for another thread.

  81. Infidel Tiger

    If you think about it, Abbott won the election by saying what Fisk has proposed.

    Now he is paying the price for not following through.

  82. .

    Oh come on
    #1332035, posted on June 3, 2014 at 8:50 pm
    If Reagan is still saying it, I’d like to know too how to cheat death…

    I see. In that case, please preface any memorable, elegant quote from a dead guy with ‘As OCO would say…’

    Of course. I remember your “Our Father” speech, your “I have a dream” speech and your “when your freind’s head is a pile of goo, you’ll know what to do!” speeches like they were said yesterday!

  83. C.L.

    The problem with Austerity is that … it really does cause hardship.

    Oh please.

    I don’t know what’s going on here.

    Suddenly all y’all are Wayne Swan disciples.

  84. Fisky

    Suddenly all y’all are Wayne Swan disciples.

    No, because that involves increasing regulation and energy prices. Whereas we want to slash that stuff so we don’t even have to worry about “austerity” anymore.

  85. Oh please.

    I don’t know what’s going on here.

    I should have made it explicit that I am in favour of massive cuts and massively smaller government; but in the short term, cuts hurt. They have to happen but they do hurt.

  86. jupes

    Well done Fisky.

    Note the difference between Fisky’s post and David L’s.

    Fisky hangs around to argue his point. David L left Dot to take the heat.

  87. .

    C.L.

    The left have played the definition changing game so that raising taxes to pay for previous irresponsible spending is ‘austere”.

    I agree with you. Propose sensible policy (economic rationalism, cut government spending, balance the budget, tax cuts and consolidation of rates and the various taxes we pay) and let the left change the meaning back all by themselves.

    Austerity will then once again mean “pared down government spending and waste”. We can exact the policies Fisk recommends however to do this.

  88. Mr Rusty

    I did once have a dinner with Maggie, Dot. True.

    I had afternoon tea with her at Downing Street once, we didn’t argue though.

  89. C.L.

    Yeah, nice effort, Fisk.

    Write some more.

  90. .

    jupes
    #1332082, posted on June 3, 2014 at 9:15 pm
    Well done Fisky.

    Note the difference between Fisky’s post and David L’s.

    Fisky hangs around to argue his point. David L left Dot to take the heat.

    Do not besmirch either of us like that.

    David L wrote a post, I chose to hang around and endlessly argue the point.

    I respect both Fisk and our Senator-elect.

  91. Infidel Tiger

    Fisk is a centre left softcock.

    He’s always half right. Remember how he had to be removed as curator of the Fisk Doctrine for only banning leftism for 10 years? Deplorable.

  92. JC

    He’s always half right. Remember how he had to be removed as curator of the Fisk Doctrine for only banning leftism for 10 years? Deplorable.

    yes, while some of us were strongly advocating wholesale city square executions by guillotine. I was shocked by Fisky’s lack of energy over this. Shocked and chagrined.

  93. Fisky

    Paul Montgomery ‏@m0nty 6h
    Loaded Dogma post: where I fisk Fisky for spruiking Zombie Reaganomics at @CatallaxyFiles. http://loadeddogma.blogspot.com.au/2014/06/zombie-reaganomics-at-cat.html … #auspol

    Mick Fisk ‏@mickfisk 2m
    @m0nty @jc6543 m0nster, Reaganomics was a huge success. Don’t tell me Swan/Slapper did better than Reagan! Don’t even try that shit on m0nst

  94. The Libs lost a lot when they lost Peter Costello.

    As for Fisky, no way is Thatcher a pinko. But you, Fisky, are several steps to the right of Ayn Rand, so this is not unexpected coming from you.

  95. Oh come on

    Thank you for the attributions, Dot.

    As an initial round of cuts, the coalition needs to reduce rates so that the total tax take does not exceed expenditure in the 06-07 financial year.

  96. Nato

    What is really needed is a growth-first, supply-side solution.
    When even the Libs will only defend the budget in social democratic terms.

    politicians need to repeal the low-growth policies. Taxes must come down, impediments to investment must be abolished, labour market regulations should be scrapped. legalise prosperity first, and worry about fiscal retrenchment later.
    Why would the Libs not have covered this in focus-group testing?

    spending cuts are hitting the weak instead of the strong and powerful enemies of the government
    That are seen by the electorate as trustworthy and fair.

    there are tax hikes on the very skilled workers that Australia needs to attract for the country to prosper.
    Envy is a powerful motivator for the wukkas, guidos, punks, artists, drunks, druggies and slackers.

    The “develop the North” mantra we heard during last year’s campaign seems to have gone nowhere.
    I’ve noticed that, too, and smell a strategic gambit for when oppositionists do, too.

    cutting penalty rates
    How many people rely on those penalty rates? Not wanting to consider what their own work is worth, but rely on government!

    slashing taxes across the board… If the government are not sure where to start…
    Didn’t Ken Henry already do something similar? I reckon you’ll find a great many voters feel that taxes are how a government ‘earns’ its money.

    What is needed instead is an unapologetically belt-loosening
    Giddy-up!

    #1332077, posted on June 3, 2014 at 9:12 pm
    Suddenly all y’all are Wayne Swan disciples.
    No, because that involves increasing regulation and energy prices. Whereas we want to slash that stuff so we don’t even have to worry about “austerity” anymore.

    Which is a message to take to voters after a term of enacting these policies. Louis CK told a joke about wifi on an aeroplane. People want to be given to, not told how it works, or invited to improve it, or . The press hail these politicians with ‘vision’. Health care, education for their children, accommodation, insulation etc are so assumed in this nation that gen-x parents feel honourable for passing this off to ‘experts’ and toeing the line.

    I agree with the general thrust of your article, but don’t think many would have considered, or even been exposed to, the themes you raise. I’m willing to attribute this as causation to PM’s astute observation at 1331750.

  97. Oh come on

    m0nty is hopeless. Fancy publicising his pathetic rejoinder!

    And I couldn’t help noticing that the Cat owns him so badly that he even has a tag on his blog dedicated to us! His soul is ours.

  98. .

    Why would the Libs not have covered this in focus-group testing?

    It got Al Gore elected!

    Envy is a powerful motivator for the wukkas, guidos, punks, artists, drunks, druggies and slackers.

    What have you got against Italian immigrants?

  99. Demosthenes

    Amidst all your fatuous sarcasm, Fisky, there is some evidence of a brain. Praising military Keynesianism doesn’t really fit.

  100. struth

    Let’s simplify this so the message is not lost with the economic prancing and fiscal masterbation going on here. Frisky’s basic message is grow the private sector. Fix that first . That will fix the revenue problem. A bigger and healthier private sector to pay for the public sector is vital. The supply side. I may not be an economist but I’m very gl ad of that. Sometimes you talk yourselves in circles when it really isn’t that hard. Just get the government out of the road and only doing what it is supposed to. We have history to learn from and tberefore we know what works.

  101. struth

    Fisky…..I really didn’t mean to stick tbe r in there…..big fingers small I phone

  102. Demosthenes

    catty little bitch

    Sounds like a contradiction in terms.

  103. Oh come on

    And yet you manage to pull it off. Congrats!

  104. Demosthenes

    Don’t be jealous. ;-)

  105. Sid

    So, the Coalition should not worry about the deficit (i.e. don’t worry about making expenditure cuts that are supposedly difficult) and focus on pro-growth supply-side policies. So, grow our way into smaller government (expenditure as % of GDP). Fine. Except… the Coalition is regularly not in office. The other mob likes your strategy of not worrying about the deficit, and has their own views about welfare enhancing policies (i.e. are quite happy to stuff the economy). So, pro-growth policies get reversed, then come in again, then go again over two or three decades. But…the deficit just keeps going up. Now the deficit is of a size where it really is a problem. And all that expenditure that no one wants to take the trouble to cut just isn’t very productive. Australia in 2035 ends up looking remarkably similar to the U.S. in 2014. Stuffed, like a tomato in the oven or a good olive.
    Do the supply-side AND cut public expenditure; don’t raise taxes. Take every opportunity to cut rates. Take every opportunity to return excess revenue to taxpayers: no Future Funds or other hoards of cash to be left for the other mob. And you can cut welfare expenditure a hell of a long way without impacting on anyone in the bottom two income deciles.
    As an aside, AUS seems to follow the U.S. by 20 to 30 years in other areas too (e.g. business R&D intensities and education attainment rates: haven’t looked at crime statistics and the like).

  106. .

    I agree. I said similar things at 2.23 pm and 9.16 pm today.

    Area denial is the key to victory in a long game.

  107. Oh come on

    Don’t be jealous. ;-)

    Jealous? Not the most perceptive chap, are ya, Jaz?

  108. Fisky

    The real debate on this thread is over the particular order that small government policies should be introduced.

    For example, to go from a closed state-run economy to an open-market economy, you have to deregulate the labour/product markets FIRST and then the financial markets after that. By doing it the wrong way round, you just open yourself up to external shocks without having the flexibility to absorb them.

    The same logic is true of a relatively open but anaemic, high-cost economy (like Jimmy Carter’s America, and like us today, although inflation is not the problem). You don’t just cut spending to start out, because that is not addressing the actual problem. The problem is the absence of vitality, growth, entrepreneurialism, etc. And that can only be addressed by taking a sledgehammer to those barriers FIRST, and unleashing the potential of the population. ONLY THEN it is feasible to clawback spending.

    But if you cut spending FIRST, and raise taxes along with it, you just sputter along like Cameron’s England for three years before finally limping out of recession before you go down to a boilerplate Stalinist like Ed Miliband.

    So let’s agree that the fundamentals of slashing taxes, regulation and spending are sound, and then put them in their logical order.

  109. Oh come on

    I’ve said it a number of times. European-style austerity (cut govt spending, increase taxes) = utter folly

    This economic death spiral discredits the word ‘austerity’ in the same way that American socialists sullied the term ‘liberal’.

    Cutting government spending whilst cutting taxes is a far more prudent path. However, Fisky is absolutely right in that the first order of business is to cut taxes and lighten the regulatory load on the private sector. Then the government can incrementally retreat from sectors of the economy it dominates (ie. cut spending), and the reinvigorated private sector will be in much better shape to take up the slack.

  110. Oh come on

    I am surprised to see opposition to Fisky’s moderate proposal.

  111. Elizabeth (Lizzie) B.

    Freeing up land, cutting penalty rates, and yes, slashing taxes across the board, should all be the first business of the government prior to any reductions in welfare entitlements.

    Freeing up regulations on economic activity in general is what is required – plus the rest of the above. Yes, a good prescription. Cutting welfare entitlements and access is politically insane in a period of falling employment and general economic crisis. Increase the carrot, not the stick, at such times. Make jobs available first.

  112. Elizabeth (Lizzie) B.

    you just sputter along like Cameron’s England for three years before finally limping out of recession before you go down to a boilerplate Stalinist like Ed Miliband.

    Yep. Happening as we speak. Except for UKIP, which may bust up the boilerplate a bit. Very very popular in Northern Britain.

  113. nerblnob

    Fiskynomics needs to be applied to local government and states too.

  114. Fisky

    nerblnob, it’s a bit trickier at the local/state level because they don’t issue their own currency, so I’d say the markets hold them to much tighter constraints in terms of borrowing. The federal government could run up deficits much longer, although it shouldn’t because the medium term aim should be to retrench spending once the growth problem is solved via tax cuts and deregulation.

  115. wmmbb

    How are you going Fisky? I like your post.

    But I wonder if it is the case that the economic policies of Ronald Reagan gave rise to economic growth? Levels of unemployment, but particularly long term and underemployment, might be seen as indicators of, or proxies for, economic growth. Leisure, as per Aristotle, is a value, even if slavery, despite the historical record, is not. The obvious and persistent problem from the Reagan program is the intensification of inequality. Markets are transformed by computer technology, such as high frequency trading in financial markets. Presumably, the use of robotics in car manufacturing reduce demand for skilled labour. What then is the social value of economic efficiency and effectiveness?

    My assumption is an economy is a system, which I would imagine is true of a farmers market. In this context I can observe that markets are framed in culture, and that involves assumptions such as contract law, materialism and so forth. Business can be, and often is, undertaken with a hand shake. Social trust is an intangible, and how can that be established except fire regulations, occupational health and safety and environmental laws?

    Does economic growth and well being run on the same tracks and stop at the same railway stations? You mention unleashing the potential of the population, which surely implies access to education in its” true sense”. Is the ideal market system purely behavioristic model of “sticks and carrots”?

  116. Fisky

    I’m very well, thank you wmmbb.

    But I wonder if it is the case that the economic policies of Ronald Reagan gave rise to economic growth? Levels of unemployment, but particularly long term and underemployment, might be seen as indicators of, or proxies for, economic growth.

    There is no doubt that Reagan achieved both. GDP growth averaged 3.5% under Reagan, and that includes about 18 months of recession in his first term. Unemployment went down from 7.5% to 5.4%, while labour market participation rates went up over 2% over his 8 years. That’s a pretty damn good record (although not quite as impressive as Howard’s).

    The obvious and persistent problem from the Reagan program is the intensification of inequality.

    It is true that inequality went up, and that is not surprising, because inequality will tend to rise during any period of strong growth. However the poverty rate decreased by about 1% during Reagan’s 1981-89 term.

    Markets are transformed by computer technology, such as high frequency trading in financial markets. Presumably, the use of robotics in car manufacturing reduce demand for skilled labour. What then is the social value of economic efficiency and effectiveness?

    I think that’s true, but it has nothing to do with Reagan. The changes you describe have happened under every President and are accelerating now. It’s possible that technological change could one day render large sections of the population irrelevant, and I think that is sad, but that has no relevance to the debate over Reagan’s policies, which I maintain were humane and excellent.

  117. .

    Well said Fisky. Reagan’s results on unemployment, inflation, growth and wages is wholly enviable and to be coveted by candidates for high office around the world.

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