David Uren had this statement in the Australian yesterday.
NOBODY predicted the slowdown in consumer spending as Australia bounced back from the global financial crisis and no one has great confidence in forecasting how long it will endure.
That can’t possibly be true – nobody Uren was speaking to was talking about the slow down. But what does intertemporal smoothing mean? Resources were transferred from the future to the present where (apparently) they were needed more – that means less in future. Of course if that transfer had been invested in productive capacity it might have led to an increased growth rate and what not, but it wasn’t; it was either consumed or invested in low value-add areas.
David Uren is co-author of Shitstorm – an important account of the incompetence of the Rudd government (I refer to my copy so often its falling apart) – this is what I said in my review of that book.
What is missing from the Taylor and Uren account is any of the economic debate that occurred within Australia. They discuss the government and Treasury views and much about the opposition, yet there is no mention of economists outside those circles. The fact of the matter is that the government was unwilling to listen to any opinions it didn’t like.
If you don’t ask the tough questions you don’t the tough answers and if you only talk to Treasury and government supporters you don’t get to hear the costs of intervention.