One of the biggest problems of big and ever bigger government is that infantilses people. It creates the belief that all problems can be fixed by government when actually most problems are actually caused by government. Take this contribution from this morning’s AFR from Alan Mitchell:
Sure Alan. Why stop at fiscal policy? Why not just get rid of all elected officials and elections and just leave government in the hands of the technocrats? After all, unelected technocratic governments have always worked out well.
What a stupid, stupid, stupid idea. Mitchell argues:
Yet, with the Reserve Bank’s conventional ammunition running low and the budget’s operating surplus forecast to nudge 1 per cent of GDP in the next two years, fiscal policy is better placed than monetary policy to support economic growth.
Shame that it was slopping monetary policy and sloppy fiscal policy that got Australia into this mess in the first place.
The problem with the Keynesian clap trap espoused by so called “experts” is that its predicated on giving power and authority to said experts and also because it is premised on the notion that it is consumption rather than production that drives an economy.
Yes yes TAFKAS knows that GDP – Gross Domestic Product – is a poor measure of economic performance. But even so, it is still Gross Domestic Product not Gross Domestic Consumption.
As TAFKAS has tried to explain to his children, who seem to understand better, people don’t eat so as to work; they work so as to eat. They produce so that they can consume. They don’t consume so that they can produce. Let TAFKAS express it in Katesian language and quote Say’s Law which says:
supply creates its own demand.
But Mitchell continues:
The days when the politicians could leave the economy’s management entirely to the RBA are past, which means fiscal policy reform should be back on the agenda.
So just because governments have been so stupid to leave “the economy’s management entirely to the RBA” in the first place that does not mean they should continue and even expand such lunacy.
If the government wants to help the economy, how about rather than borrowing and spending, perhaps they consider some productivity enhancing policies? How about a productivity policy? How about an industrial relations policy? How about a deregulation policy? How about a government contraction policy? How about some tax cuts. How about some public sector efficiency and effectiveness measures. How about some reforms to politician expenses. Several policy areas that should be considered before taxing current and future tax payers back to the stone age?
It is not enough that the 3 levels of government consume more than 36% of GDP and employ 2 million workers. No lets get some more public servants to spend some more and hire some more public servants.
Thus Mitchell quotes and idea re-floated by HSBC’s chief economist in Australia and New Zealand, Paul Bloxham who himself re-floats an idea from Alan Blinder, a prominent US economist.
Guess what. Bloxham is a former RBA official and public servant and Blinder is a former official of the US Federal Reserve and public servant. 2 public servants advocating for more power to the public service without the bother of democratic accountability. Who would have thunk it?
Here’s one of Mitchell’s policy ideas:
A temporary cut in the GST rate – or the announcement of a future increase in the rate – would create a powerful incentive to bring forward discretionary consumption and housing construction.
And pray, will this temporary cut to the GST be matched with a temporary cut to government spending? Ummm. Would these technocratic public servants recommend a policy to adversely impact their brethren?
And why temporary and why just GST. Why not a cut to GST, income tax, company tax, fuel tax, payroll tax, council rates, stamp duty with a concomitant cut to government spending? Do we need technocrats for that advice? TAFKAS just provided it for free.
But sadly Mitchell suggested that:
Blinder’s idea (of fiscal policy by technocrats) was dismissed as too radical.
Too radical? How about too stupid?
But whenever there is a discussion about the enhanced powers of government and the technocracy, a carbon tax or emissions policy is never far away. Mitchell closes with:
Maybe while they were taking back the GST, Scott Morrison and his treasurer could also think about the revenue-neutral incorporation of a tax on carbon emissions. That is, the GST rate on everything else would be cut so that total tax take would stay unchanged. As emissions fell, the other rates would gradually rise to keep revenue growth steady.
Granted, it would be a bit messy, but it could give the Coalition a credible policy on emissions reduction.
A revenue neutral tax. That would be an oxy-moron.
And advocate for a carbon tax and increased powers for government and the technocracy. That would be a regular-moron.