Told ya so

Here’s the front page story in The Oz today: Aussies no better off since GFC: household incomes stagnant for past decade. From which:

“Over the eight-year period from 2009 to 2017, average household income grew by only $3156, or 3.5 per cent, while the median in 2017 was $542 lower than 2009,” the report, which has tracked the circumstances of more than 17,500 Australians since 2001, finds.

The share of households in relative poverty — living on less than half the median income — rose to 10.4 per cent, according to analysis released today by the Melbourne Institute that will add to the controversy about the adequacy­ of Newstart, the govern­ment’s jobless payment.

All as obvious as the morning sun, if you can do away with modern macroeconomic trash and return to pre-Keynesian theory. From my tenth anniversary warning on the stimulus published in Quadrant:

Just as the causes of this downturn cannot be charted through a Keynesian demand deficiency model, neither can the solution. The world’s economies are not suffering from a lack of demand and the right policy response is not a demand stimulus. Increased public sector spending will only add to the market confusions that already exist.

What is potentially catastrophic would be to try to spend our way to recovery. The recession that will follow will be deep, prolonged and potentially take years to overcome.

— Steven Kates, Quadrant, March 2009

Why have the IMF, the OECD, the ILO, the treasuries of every advanced economy, the Treasury in Australia, the business economists around the world, why have they got it so wrong and yet you in your ivory tower at RMIT have got it so right?

— Question to Steven Kates from Senator Doug Cameron,
Senate Economic References Committee, September 21, 2009

I caught on to classical economic theory in 1980 and have spent the years since watching in every circumstance how accurate the economics of John Stuart Mill actually is, from the failure of every single “stimulus” put in place anywhere in the world to stimulate, through to watching the recovery that followed the massive cuts to public spending brought on by Peter Costello’s budget in 1996 and the return, not just to balanced budgets but zero debt. Modern Keynesian economics is junk science and has never worked on a single occasion during the entire period since The General Theory was published in 1936.

Read my text if you are interested: Free Market Economics, now in its third edition. And here is the endorsement from Art Laffer, the genius behind the Reagan recovery and now also complicit in the recovery in the United States:

‘This book presents the very embodiment of supply-side economics. At its very core is the entrepreneur trying to work out what to do in a world of deep uncertainty in which the future cannot be known. Crucially, the book is entirely un-Keynesian, restoring Say’s Law to the centre of economic theory, with its focus on value-adding production as the source of demand. If you would like to understand how an economy actually works, this is one of the few places I know of where you can find out.’

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19 Responses to Told ya so

  1. Pyrmonter

    Kates and Picketty, a unity team.

    I suspect herein lies part of the answer: https://voxeu.org/article/piketty-s-housing-capital-results-new-us-facts.

    Another part would lie in the increasing share of households all of whose members are now retired.

  2. Karabar

    “Question to Steven Kates from Senator Doug Cameron,”
    Typical of Lefty Lunacy which argues “Why do you say climate change is nonsense when all the scientists claim it will make the world fall out of orbit”.
    That old Oatmeal Savage is at least out of Parliament and that is a good thing.

  3. Louis

    Well the problem with your theory Steve, is that it doesn’t allow sufficient opportunity for graft!

    Stimulus spending takes the usual snouts-in-trough system and puts it on steroids.

  4. Mother Lode

    The sooner they increase the dole and public servant salaries the sooner we can all reap the benefits.

  5. Tator

    It is quite amazing to see how stupid politicians really are. They believe in one or two Economists who differ from the norm when the evidence points the other direction but when it comes to the science of climate change, it is vice versa where they believe in the norm even though the evidence is not supporting it. Both beliefs though, allow them to appear to be doing something by spending scarce taxpayers money. What a bunch of morons they are. Reminds me of the Public Relations Section of the Sirius Cybernetics Corp. All of who ended up against the wall when the revolution came.

  6. Ellen of Tasmania

    Goes for about 14 mins:

  7. Terry

    “What a bunch of morons they are”

    Perhaps, if one assumes that their purpose is to “get it right” and it is merely their (lack of) capability holding them back.

    Alternatively, if their purpose is the appearance of caring while lifting conveyor-belts of money from your wallet for their own advancement (wealth and power), then their perceived incompetence is merely a facade masking malicious intent.

    Of course, neither option matters as to whether they should be retained “in the service of the public”, only whether they should be dismissed and let go or dismissed and lined up against a wall.

  8. Ben

    I have your book Steve, got it for a birthday present a few weeks ago! Very much looking forward to it, and comparing your points to Thomas Sowell’s “Basic Economics”, although I might have to re-read that one, it’s been a while.

    I have it on my bedside table. Your book is scheduled to be read once I get through Ben Shapiro’s “The Right Side of History” and Cixin Liu’s “The Three Body Problem”.

  9. C.L.

    Told ya so

    You really did, too.
    Well done.
    My God, that whole GFC/neo-Keynesian era was annoying. The lies were ceaseless.

  10. I_am_not_a_robot

    Trading Economics site shows GDP from all sectors for the past 10 years trending up except for manufacturing where there has been a steep fall correlating with a government-mandated fall in CO2 emissions — just coincidence of course.
    As an aside, the supposed ’emissions’ on the photo at the top of the ABC report, typically shot against a setting sun, are in fact steam from cooling towers.
    The smoke stacks are not emitting anything.

  11. old bloke

    sfw
    #3119064, posted on July 30, 2019 at 4:27 pm

    I’d like to buy it but it’s a hell of an expensive paperback.

    That’s Steve’s way to stimulate the economy.

  12. Roger

    It is quite amazing to see how stupid politicians really are.

    No, it isn’t.

  13. Squirrel

    Just imagine how much worse the results would have been if the commodity markets had not (to use PJK’s colourful expression) continued to shoot us up the fundament with a very lucrative rainbow?

    I was reminded of this continued unearned good fortune today, when I was listening to some gender-based analysis of the results which (as I recall it) mentioned that the “average” male wage was now just over $100k and the “average” female wage was somewhere in the $70s p.a. – the detachment from the economic reality of most of the countries with which we trade and compare ourselves is utterly stunning.

  14. Chris

    Cixin Liu’s “The Three Body Problem”.

    Wooo. Good book.

  15. Paul

    Doug Cameron? Doug “British disease” Cameron?

    That clown?

  16. mh

    Chris
    #3119126, posted on July 30, 2019 at 5:50 pm
    FMD.
    $499.34 for Kates book

    With free delivery.

  17. Richard Bender

    I assume the third edition of Free Market Economics must dispense with the view expressed in earlier editions that artificially low interest rates are a bad thing. After all, the infallible President Trump has ordained that the US Federal Reserve should lower them.

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