Warwick McKibbinn now an occasional columnist for the AFR, has established himself as the ‘sensible’ technocrat economist acceptable to many sides of politics. He has campaigned for a pure form of carbon tax that the execrable Grattan Institute once promoted before concluding, in a paper, which also gets an op ed in the AFR today, that even a very high carbon price would not bring about the renewables nirvana they promote – for Grattan the reasons are some mumbo-jumbo about failure of ‘first mover’ advantages.
But back to McKibbin. In his first AFR column (sub. required) he says:
The crisis inEurope …. has come to a head because of large-scale, macro-economic mismanagement, but this was a result of a wide series of policy errors over time which have merely been exposed by a sudden unexpected shock.
So far so good. And he adds
Some of these mistakes include: too much government focus on redistributing wealth rather than generating wealth; a focus on large-scale intervention to meet environmental goals set by the emergence of the green parties rather than serious assessment of the costs and benefits of policies; wasteful industry support through massive subsidies that badly distorted markets over many years; the idea that governments drive the economy and create jobs rather than the idea that governments provide the conditions through markets and transparent regulations that enable the private sector to create jobs; a reliance on Keynesian economics that led governments to create an enormous overhang of government debt generated by spending on activities that did not generate sufficient return to service that debt; and labour market rigidities preventing real wage flexibility when an economic shock occurs.
Nobody, other than the government shills, can argue with this.
But then we come to his solutions. He says,
Governments and the private sector need to work together, rather than sequentially.
Opps. Sounds a bit Gordon Brownish! He continues,
It is clear that there is a role for government in redistribution and regulating markets and providing funds for research and development. The extreme Right is wrong to focus on unfettered markets and the extreme Left is wrong to dismiss markets and leave everything to government. The best policy will balance the potential benefits of markets with good government regulation.
So he is positioned as the wise man arguing for sensible government intervention not the rapacious type that others less talented than himself would favour. Just to prove his free market credentials he pontificates against support for the car industry which has, he argues, been based on inadequate analysis. Then he rounds it all off by arguing,
Decisions will be made by politicians, but they need to be based on clear evidence using the input of experts to debate the issues, and using hard data to focus on reality rather than dreams.
Nowadays he may argue that the massive evidence (including his own) marshaled by Treasury, Garnaut and other ostensible unbiased parties that was used to support the carbon tax and mining tax does not meet the bill. Undoubtedly he is seeking an enlarged role for the Productivity Commission, everybody’s favoured government analytical body, but perhaps he alone is the only expert capable of delivering.