Lie for me: Henry

Ken Henry appears to have made the most extraordinary statement at a speech yesterday. I haven’t read the transcript of the speech yet, and perhaps these were answers to questions afterwrds; I think the full context is going to be important.

‘Whenever an idea is ventured publicly by a person, whether that person is a policy adviser or whether it’s a government minister, there’s at least a handful of academics who will contest it.

It is a great strength of economics as a discipline … But I think there are occasions on which economists might, at least for a period, put down their weapons and join a consensus.

I’m not going to comment about the resource super profits tax but I will talk about the emissions trading scheme. Most academic economists accepted, at least behind closed doors, that it was a sound policy idea. Yet there were no end of academics who wanted to say for example, it’s not bad, but a carbon tax would be better. That did not increase at all the chances of a carbon tax being legislated. All it did was reduce the chance of an emissions trading scheme being legislated.

In the way in which political debate occurs in Australia, such statements do enormous damage to the prospects of sensible reform. There are times when it would serve the national interest if economists could just call a halt to the war for a while.

I don’t think that it is appropriate that economists collude with government and conspire with Treasury to produce bad policy. That is not something that economists should do. Henry seems to be suggesting that anything is better than nothing when undertaking policy reform – yet if that were true we wouldn’t need to have Treasury. Good policy does not come from having a monopoly of ideas and thought, good policy comes from debate and a competitive market for ideas.
Update: The AFR (page 6) reports that this was a ‘candid question and answer session after the prewritten speech’.

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72 Responses to Lie for me: Henry

  1. dover_beach says:

    Yes, this was the speech I heard Henry on PM prattling on about. It was only a matter of time before the flag of consensus would be raised on matters beside climate change. The extraordinary thing, however, is that it is only raised by one party to a debate; when its the other side putting forward a proposal the side that now calls for a consensus thinks it must speak truth to power. Henry must go.

  2. Rodney says:

    It is interesting that Ken H. compares RSPT to Carbon Trading. Whatever its theoretical virtues, Carbon Trading involved credits and exemptions by arbitrary Govt decision; a recipe for bad choices if not for lobbying and corruption.
    The Govt is now negotiating special deals for various operators, which destroys any integrity the RSPT model may have.
    The role model for all this is town planning under the NSW Labor government.
    To put it another way, if BHP is not prepared to make a large donation to the labor party, they deserve to be lumbered with an RSPT.

  3. pedro says:

    Yes, he must go. That is not the advice of an honest man.

  4. Butterfield, Bloomfiled & Bishop says:

    how amusing catallaxian crackpots who understand what lying is talk about honesty of which they do not.

  5. . says:

    They should have just made a quid pro quo to the States to have a uniform version of the WA royalty system extended onshore and offshore and split between the Commonwealth and States.

    #

    http://siteresources.worldbank.org/INTOGMC/Resources/336099-1156955107170/miningroyaltiespublication.pdf

    Do we need the *reform* at all?

    p. 191

    “This conclusion still leaves two questions: First, Why did the Western
    Australian gold royalty not have a greater impact on the state’s investment
    climate? Second, has the royalty served the public interest by promoting
    the welfare of the people of Western Australia?
    Drawing on the previous case study of Chile, the modest effect of
    the royalty on Western Australia’s investment climate can be assumed to
    refl ect the fact that the royalty did not greatly alter the expected returns
    (IRR or NPV) of gold projects in the state or the perceived risks associated
    with those projects. One reason for this was likely the manner in
    which the royalty was applied. At the time the legislation introducing the
    royalty was passed, in 1997, it was to be a 2.5 percent ad valorem royalty
    that would take effect in 1998. However, because of depressed market
    conditions and the low price of gold, the royalty was applied at 1.25 percent
    from July 1998 and increased to the full rate of 2.5 percent in July
    2000. However, from July 2000 to July 2005, the rate of 1.25 percent
    was applied in each quarter that the average spot price of gold was less
    than $A450 per ounce. Moreover, the fi rst 2,500 ounces of gold production
    from each gold royalty project were exempt from the royalty.
    Referring to these changes, Rob Fraser, an economist then at the University
    of Western Australia, in 1999 wrote:
    In doing so, the WA government has responded to the expressed concerns
    of the industry in relation to the detrimental impact of the royalty on profits,
    especially in times of relatively low prices. Moreover, at the same time
    it has created a novel form of resource taxation, where the revenue base
    of the tax is modifi ed to take account of periods of unusually low profi ts,
    and where the price of gold is treated as a simple proxy for the level of
    profi ts. (35)
    In short, despite the original intent to tax the value of gold output, the
    royalty as implemented taxes the value of output only when prices are
    suffi cient for most fi rms to be profi table. This substantially reduces fi rms’
    expected costs of the royalty and the risk borne by the private producers
    arising from the cyclical nature of gold prices.”

  6. Steve Edney says:

    Ode to Henry

    how amusing catallaxian crackpots,
    who understand what lying is,
    talk about honesty,
    of which they do not.

    H. Paxton

  7. jtfsoon says:

    LOL

    perhaps we should start calling him Haiku Homer

  8. JC says:

    I ask this in the sincerest way possible. Is wombat-Henry having some sort of psychological disturbance, as I can’t imagine any mentally healthy senior public servant having these extraordinary outbursts.

    Perhaps he feels sunder pressure, as the job may be too big for him to handle or that he feels that his time is short seeing next election may see the other side back in power and he’ll be gone in a nano-second.

    However I’m actually starting to feel sorry for him now.

  9. JC says:

    Fleeced
    Wombat- Herny’s threat of the roll out should wipe the smile off other industry sectors that were okay with a super profits tax for the mining industry.

  10. Fleeced says:

    Indeed, JC… this is truly astounding. What’s all this bond rate nonsense? No concept of risk/return at all.

    My first thought when I read that was, “No, no – dig UP, stupid!”

  11. C.L. says:

    But I think there are occasions on which economists might, at least for a period, put down their weapons and join a consensus.

    What he means is: “But I think there are occasions on which economists might, at least for a period, put down their weapons and defend the Labor Party at all costs.”

  12. JC says:

    CL, Fleeced.

    I think this fucker is to the left of the Greens. No kidding. I think even Bob Brown would think twice about suggesting such a policy ( but would warm to it)

    He’s extremely arrogant for someone who seems to make some pretty serious fundamental mistakes in the area of economics.

    This after all is the turkey (or wombat rather) who came out and told people that he rushed to advise those other nincompoops (Rudd and Swandive) to go hard and go early with the fiscal spending mess because his mother asked him a question about the bank’s solvency. He later had the nerve to accuse Barnaby of being simplistic with economics.

  13. JC says:

    Here take a looksee.

    Peter Martin, who I refer to as the anti-economist, talks about Wombat’s climb to the mountain top.

    Martin of course is totally oblivious to the irony where we have Wombat’s ma essentially determining some pretty major Australian economic policy.

    Ken Henry had spent all Saturday locked in the cabinet room with Kevin Rudd and senior ministers trying to ward off the global financial crisis. Now the Treasury secretary just wanted a quiet Sunday lie-in. Then the phone rang.

    “I’m really worried!” It was Henry’s mother. “Should I go down to the bank on Monday morning and take all my savings out?”

    With his mum worried too, the Treasury secretary decided there was no choice but to advise the Prime Minister to instigate the bank guarantee scheme and the first $10.4 billion of a series of stimulus packages credited with saving Australia from the full impact of the global financial crisis…

    A couple of hours after his mum rang that Sunday, the Treasury secretary told the Prime Minister: “You know that discussion we were having yesterday? My mother takes a keen interest.”

    Henry advised a bank guarantee was needed to secure the country’s financial institutions and Rudd announced it that afternoon.

    No talk about examining liquidity, banks balance sheets, discussing these issues with the RBA who I might add is the primary body responsible for our banking system.

    No Wombat exchanges a couple of sentences with ma over the phone and that sets him off.

    What makes this even worse is that he seems to have those other two idiots (Rudd and Swandive) under his influence. It seems that even Rudd was listening to Wombat’s ma.

    Fme.

  14. Sinclair Davidson says:

    JC – I don’t think Peter Martin broke that Ma Henry story. It was John Kehoe IIRC in the AFR.

  15. Steve Edney says:

    “Indeed, JC… this is truly astounding. What’s all this bond rate nonsense? No concept of risk/return at all.”

    Ken bleives that since companies have 40% of their costs backed by the australian government they should get funding at this rate. Any differnet rate will be a source of arbitrage for the market. If the Govt were serious about this they would provide fund up front and actually become JV partners.

    I would have though the more serious issue is that they have essentially nationalised 40% of all existing assets.

  16. Sleetmute says:

    I don’t think the Coalition’s ultimate decision to oppose the CPRS was driven by what some economists had said about a carbon tax versus emissions trading. Henry needs to get out of Canberra and try out the real world for a while.
    That said, I must admit I was a bit annoyed when people like Tim Colebatch so vehemently opposed the US FTA because it was less than perfect. But the answer is trying to persuade people around to your point, not asking them to shut up. And fortunately, the government didn’t listen to his ilk anyway!

  17. JC says:

    Thanks Sinc.

    I wasn’t trying to suggest Pete broke the story. As the economics editor at Unfairfax I would have thought he would at least have made mention at the time he was a little concerned that a mother and son conversation over the phone turned major economics policy. That seemed to be lost Pete who also seems to be a stickler for “evidence based policy”. LOl.

    In this case evidence based policy must be referring to visibly sighting the telephone bill to confirm Wombat did actually have this conversation with his ma.

    I keep referring to this event, as I think it is perhaps one of the most bizarre stories I’ve ever read about Australian economic policy in the history of the Federation. In fact I don’t think there was anything as ridiculous even during the times of the colonies.

    Meanwhile Wombat has the nerve to refer to Joyce as simplistic……and we now find he thinks anything over the bond rate is a super profit.

    Fme.

  18. dover_beach says:

    However I’m actually starting to feel sorry for him now.

    Toughen the hell-up. JC.

  19. Butterfield, Bloomfiled & Bishop says:

    According to the crackpots if say tariffs were 50% and a report recommends they be reduced to nil over say 10 years but a government only wishes to introduces a reduction to 25%. This must be resisted at all costs.

    This resistance is successful.
    however you still have 50% tariffs.

    Crackpots are still pure but the economy is worse off.

    Bad policy is no action on AGW, bad policy is for the community to get less from their resources than when commodity prices were low.

  20. . says:

    Butterfield, Bloomfiled & Bishop,

    Please learn to read,

    “#

    I don’t think the Coalition’s ultimate decision to oppose the CPRS was driven by what some economists had said about a carbon tax versus emissions trading. Henry needs to get out of Canberra and try out the real world for a while.
    That said, I must admit I was a bit annoyed when people like Tim Colebatch so vehemently opposed the US FTA because it was less than perfect. But the answer is trying to persuade people around to your point, not asking them to shut up. And fortunately, the government didn’t listen to his ilk anyway!

    Sleetmute

    22 Jun 10 at 10:43 am”

  21. pedro says:

    Homer, Henry is recommending a form of misleading and deceptive conduct. That sound like an honest approach to you?

  22. pedro says:

    Homer, please identify the global reduction in emissions resulting from the proposed ETS if implemented and describe how the loss of that reduction is comparable in practical effect to the failure of a national tariff reduction program.

  23. Butterfield, Bloomfiled & Bishop says:

    Marky,
    learn to read yourself.
    how in the hell in that related to what I wrote.

    Pedro,
    the bad policy was with us.
    Granted the CPRS was not the best policy re AGW it s better than what we have at present.
    Moreover once you have the policy in you can always change it for the better.
    No [policy then there is nothing.

    No policy is the worst policy.

    In terms of lying the crackpots have it all over anyone. Henry made the recommendation after a series of events. the largest being a mini-run on banks.
    he then got two anecdotes re safety of banks.
    err he had discussed this with Glenn as he was the one who had advised the government and Henry about the mini-run afterall how else would they know about it!

    Catallaxy never let the facts get in the way of a good lie however

  24. dover_beach says:

    According to the crackpots if say tariffs were 50% and a report recommends they be reduced to nil over say 10 years but a government only wishes to introduces a reduction to 25%. This must be resisted at all costs.

    This would be silly if there were only one alternative; thankfully there isn’t. Henry is asking that all economists fall in lock-step with whatever the government puts forward as economic ‘reform’. What a disgraceful recommendation; I’m not surprised you’ve fallen in lock-step with Henry in support of his plea.

  25. John H. says:

    Good policy does not come from having a monopoly of ideas and thought, good policy comes from debate and a competitive market for ideas.

    Is Henry off his rocker? Yesterday I read a book on gravity: Re-inventing Gravity by John Moffat. It goes through all the current approaches and the debates surrounding these approaches. While the popular media may portray the developments in modern physics and cosmology as being about dark energy and string theory, in fact many physicists repudiate both concepts and are seeking other solutions. It seems to be the case that Henry wants advisors to adopt a “popular media” approach to complex issues. So let’s dumb it all down, make it all appear that the major issues are settled, let’s delude the general public into thinking all the experts are agreed on the approach. Damning, when complex issues are presented as being resolved and the public are not made aware of dissenting views the public is being brainwashed into a level of certainty that behind closed doors many experts are mocking.

  26. Butterfield, Bloomfiled & Bishop says:

    Snoopy,

    there were two alternatives with regard to the CPRS.

    We either had it or we didn’t.

    Me I would prefer a simple carbon tax but it wasn’t on the table.

    The opposition meant we still have the worst policy.

    In terms of my example there are two alternatives.A cut to 25% or no cut at all.
    you lot would have no cut at all.

    that isn’t just silly it is stupid.

  27. dover_beach says:

    Henry: Lie for me.

    Homer: Yes, master.

  28. pedro says:

    “No policy is the worst policy.”

    Wrong, a policy with costs but no benefits is worse than no policy.

    “In terms of lying the crackpots have it all over anyone. Henry made the recommendation after a series of events. the largest being a mini-run on banks.
    he then got two anecdotes re safety of banks.”

    WTF? Henry is recommending that economists dissemble about their real views to support a policy that they might think is suboptimal but better than nothing. I think that is a call to a species of dishonesty. In reply Homer starts raving about bank runs.

  29. pedro says:

    “In terms of my example there are two alternatives.A cut to 25% or no cut at all.
    you lot would have no cut at all.

    that isn’t just silly it is stupid.”

    No, it’s a straw man. The contrast is between a policy proposal that does something good (reducing tariffs) and that does nothing good (an ETS with meaningless reductions in emissions). However, I’d bet that if Henry, KRudd and Swann call for a tariff increase Homer would back it.

  30. jtfsoon says:

    err he had discussed this with Glenn as he was the one who had advised the government and Henry about the mini-run afterall how else would they know about it!

    translation?
    relevance?

  31. dover_beach says:

    The opposition meant we still have the worst policy.

    No, you haven’t demonstrated that the CPRS was “better” than no policy. Your maxim, No policy is the worst policy, suggests than any policy, however stupid or extreme, is better than leaving well enough alone, which is so stupid as to be unworthy of further attention.

    So far as your example is concerned, I agree, if negotiation, etc. fails to achieve your stated preference, what is offered is better than the status quo, but this is/ was never the case viz. the CPRS or for that matter the RSPT.

  32. Butterfield, Bloomfiled & Bishop says:

    translation.

    Only the RBA actually has the statistics old son.

    Pedro you blithering idiot who started raving about bank runs

  33. pedro says:

    I did? Where exactly, you loser?

  34. . says:

    “how in the hell in that related to what I wrote.”

    You basically called us out as hypocrites but were wrong.

    “No, you haven’t demonstrated that the CPRS was “better” than no policy. Your maxim, No policy is the worst policy, suggests than any policy, however stupid or extreme, is better than leaving well enough alone, which is so stupid as to be unworthy of further attention.”

    Indeed…”old taxes are fair taxes…”

  35. . says:

    “Only the RBA actually has the statistics old son.”

    ???

    ETS, RSPT…somehow morphs into macro modelling by the monetary authority???

  36. asf says:

    So shorter Henry is: I wish all economists were like that Homer fellow who comments at catallaxy.

  37. Butterfield, Bloomfiled & Bishop says:

    Pedro either you can read or you cannot.Thus far you have shown you cannot.

    hint Ken Henry’s mum ‘winner’

    Oh of course crackpots here would have opposed the GST as it involved not taxing food bit hold on that was the previous Government but the Same Secretary!!

  38. jtfsoon says:

    Introspection

    either you can
    read
    or
    you cannot.

    H. Paxton, winter 2009

  39. . says:

    “Pedro either you can read or you cannot.Thus far you have shown you cannot”

    That’s really interesting considering your falsified accusations of hypocriscy and the best being the enemy of good.

    “Oh of course crackpots here would have opposed the GST as it involved not taxing food bit hold on that was the previous Government but the Same Secretary!!”

    Butterfield, Bloomfiled & Bishop,

    Please learn to read,

    “#

    I don’t think the Coalition’s ultimate decision to oppose the CPRS was driven by what some economists had said about a carbon tax versus emissions trading. Henry needs to get out of Canberra and try out the real world for a while.
    That said, I must admit I was a bit annoyed when people like Tim Colebatch so vehemently opposed the US FTA because it was less than perfect. But the answer is trying to persuade people around to your point, not asking them to shut up. And fortunately, the government didn’t listen to his ilk anyway!

    Sleetmute

    22 Jun 10 at 10:43 am”

  40. pedro says:

    Hey Homer, lets get back to the point, do you agree with Ken that economists should dissemble about their real views? Yes or no?

  41. C.L. says:

    My God, he’s gone completely bananas:

    Henry urges wider profits tax.

    A super-profits tax should be rolled out for all companies in Australia as a long-term reform.

    Treasury secretary Ken Henry says the tax would be similar to the model proposed for mining groups.

  42. . says:

    Jesus, the 1970s are back in full swing!

  43. Butterfield, Bloomfiled & Bishop says:

    Pedro,

    it ain’t dissembling,

    Marky,
    it is irrelevant

    yes any economist worth his or her salt would agree with a tax on super normal profits

  44. jtfsoon says:

    Unless I am mistaken, Henry’s long term proposal would involve abolishing the company tax and putting in place a super normal profits tax instead.

    As I understand it, the other Henry, Henry Ergas canvassed a similar proposal in his alternative review report. It’s not necessarily a high taxing proposal and in theory it’s not a bad proposal. Ken Henry is right to suggest that it can have positive incentive effects. Again this is basic arithmetic. Profits are the difference between income and costs. Superprofits are then an even narrower subset of this. Obviously the taxation base is by definition narrower than income alone and the disincentive effects of taxing above the opportunity cost of capital and enterprise can in theory be lower than a blunt tax on company income.

    The problem is whether any government can be trusted to implement this proposal properly given how badly Rudd cocked up even *one* supertax./

  45. jtfsoon says:

    http://www.theage.com.au/business/ergas-tax-study-deserves-same-scrutiny-20100203-ndme.html

    Company tax would be very different. As ”an ideal”, Ergas would like to see the model used for resource rent tax applied to all businesses. The authorities would calculate an expected rate of return on capital and then tax only the excess profits made on top of that.

    ”But it’s hard to calculate the right returns for each industry, and the transition issues would be difficult,” he says.

    The proposal is textbook economics. There is nothing wrong with it in principle. it certainly can lead to much lower taxation for the majority of business as company taxes would essentially be abolished in the Ergas vision.

    It’s the details that matter as Ergas himself concedes/

  46. dover_beach says:

    Yes, the details matter. And returns above 6% are not super-profits.

    BTW, would this proposal also mean the companies making losses would be compensated whatever agreed percentage the tax is supposed to be? Seems to me that this sort of tax is a quasi-nationalization of private enterprise.

  47. pedro says:

    “”But it’s hard to calculate the right returns for each industry, and the transition issues would be difficult,” he says.”

    A legislative nightmare.

  48. pedro says:

    Homer, not giving all the relevant information is dissembling and misleading and deceptive conduct under the TPA.

    Jason, what do you think about the incentive effects of a super-profits tax? The temptation will be to make it a high tax on profits above the line, and so perhaps it becomes a serious disincentive to competition.

  49. jtfsoon says:

    I don’t know whether the Ergas plan also proposes the compensation too.

    I don’t quite understand why words as opposed to substance matters. The main problem with nationalisation is that it involves direction by government. Where is the direction in this case?

    I agree that it’s not a good tax in practice because it would be an administrative nightmare to implement but let’s get the arguments against it right.

    Economists like lump sum taxes, In the first best world there would just be lump sum taxes like poll taxes where your behaviour will have minimal impact on the tax you pay and therefore disincentive effects are minimised. this is just an application of the idea to companies.

  50. jtfsoon says:

    The temptation will be to make it a high tax on profits above the line,

    Yes I agree that would be a problem.

  51. pedro says:

    “I don’t know whether the Ergas plan also proposes the compensation too.

    I don’t quite understand why words as opposed to substance matters. The main problem with nationalisation is that it involves direction by government. Where is the direction in this case?”

    Let’s assume not, because there is no basis to expect it. Like the RSPT, it is just a way of calculation taxable income. In the RSPT, the tax deduction is just the fig leaf to cover the distorting effects on a tax that is in addition to the company tax and consistent with the idea that we all own the resources. The Ergas tax is a new form of company tax, not an additional tax.

    In fact, the Ergas tax is just a tax free threshold and a new rate of tax on income above the line. That is not exactly a weird idea.

    I can’t see a sensible basis for either differing thresholds or differing tax rates.

  52. pedro says:

    From Ergas: “Stamp duty on real estate transactions would go and be replaced by a low annual land tax imposed on all landowners, including home owners, an idea the government’s Henry review baulked at.”

    People seem to forget we already have a land tax on all landowners.

  53. C.L. says:

    The panic and loathing are now public.

    Labor backbenchers turn on Kevin:

    Rudd under fire from Labor MPs over mining tax ads.

  54. ennui says:

    jtfsoon
    A very timely reminder. It is hard to believe that the Ergas ‘report’ saw the light of day only a few months ago and, as one would expect from him, both pithy and creative. Therefore politically scary!

    Unfortunately, as the other Henry (Ken) commented –

    ‘It is tough to convince a wary public – tougher still a cynical media. And virtually impossible – in Australia at least – to secure political consensus on any tax proposal other than a straightforward cut.”

  55. PaulM says:

    Henry is peddling the same rubbish which his friends over in “Human caused Global Warming” land do, using religious (faith) terms to stifle debate i.e if you are against me, then you must be silenced as a heretic.

    Moreover, Henry is a believer in resource rents so people attacking his elegant tax are “unbelievers”. It cause him mental anguish that people think his policies are flawed.

    As I have written before, this whole tax is based on a fallacy of economic rent. It was destroyed close to 200 years ago and still we have people believing it.

    As Henry’s later statement on extending this tax to all companies demonstrates he doesn’t care about realities as long as his models and taxes work in theory. Like arguing about the number of angels which would fit on a pinhead.

  56. TerjeP (say Taya) says:

    Company tax should be abolished and we should just have a withholding tax on dividends.

  57. Rococo Liberal says:

    Terje is correct. We should follow the US model, where only listed companies are charged company tax.

    Australian companies should be encouraged to retain profits for expansion and capital investment. Taxing divdends rather than profits would do this. It would also enable us to do away with all those complex trust arrangements that so bedevil our system at the moment.

  58. Adrien says:

    <i.only listed companies are charged company tax.

    .
    Nah. $1 out of every $4 you earn. $1 out of every $4 you spend. And fix it so you can live your whole life without once going near a bank. That’s it.
    .
    Probably wouldn’t work but it sounds fair to me.

  59. pedro says:

    “‘It is tough to convince a wary public – tougher still a cynical media. And virtually impossible – in Australia at least – to secure political consensus on any tax proposal other than a straightforward cut.”

    Rubbish
    http://www.austlii.edu.au/au/legis/cth/consol_act/antsasta1999402/

  60. pedro says:

    RL, me thinks you’d have to allow the flow through of losses to get rid of trusts.

  61. rog says:

    Dividends are also paid by private companies – dividend imputation ensures that tax is only paid once so take your pick – company tax or income tax.

  62. Adrien says:

    Remember Baroque Bastardo does not want a simplified, straightforward tax system. He’d be out of a job. 🙂

  63. TerjeP (say Taya) says:

    RL – I was thinking more the Estonian model.

  64. dover_beach says:

    I don’t quite understand why words as opposed to substance matters. The main problem with nationalisation is that it involves direction by government. Where is the direction in this case?

    They’re not merely words. If it’s going to be like the RSPT then surely compensation is also involved. BTW, I referred to it as a quasi-nationalization in order to take into account the fact that the government is liable for x% of the profits and the losses without having the capacity to judge or direct this or that company’s invest. Further, I’m not sure why it is a good idea to have the government further enmeshed in corporate affairs even if it lacks the capacity to direct.

  65. pedro says:

    “Further, I’m not sure why it is a good idea to have the government further enmeshed in corporate affairs even if it lacks the capacity to direct.”

    It’s not, if the consequence is a too big a reduction in the incentives to invest and work and too big a hit on the opportunity cost for the money taken by the govt.

    The RSPT is just a tax, but it looks like a fairly stupid tax.

  66. Judith Sloan says:

    Perhaps Ken should read a bit more von Hayek and recall his important warning from the Fatal Conceit that ‘The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design’.

  67. HC says:

    Ken Henry is a scupulously honest civil servant who calls it as he sees it. I attended the speech being referred to here and it is being misrepresented.

    He was saying that when the CPRS was announced many economists denounced it and said they favoured a carbon tax. Henry was simply pointing out that this choice is much less important than the choice of doing nothing rather than something.

    He’s a civil servant who can’t easily defend his integrity. But he has worked for both sides of politics which says a lot.

  68. Samuel J says:

    I call on Ken Henry to join a consensus of those opposingbthe RSPT

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