Intelligence Litmus Test

Is there a level of ignorance and stupidity that should disqualify someone from holding public office?  Is there a limit where someone says something so ridiculous that there is a general consensus that that person be voted off the parliamentary island and disqualified from ever holding “elected” office ever again?  Should there be such tests and standards?

Well testing this limit this morning was The Hon Adam Searle, the NSW Shadow Minister for lots of things and Industrial Relations.

Now please note that Mr Searle is a Member of the NSW Legislative Council which is why TAFKAS put elected in brackets above.  The NSW Legislative Council is the upper house where election is effectively (but not always) by political party appointment.  And given Mr Searle is an ALP member, he was essentially appointed by the Unions of NSW.

So …. Speaking this morning on ABC radio in discussion of the NSW Government’s decision to suspend public sector pay increases, Mr Searle said:

We know that when you spend in the economy, there’s a multiplier effect. So you go to your shop, you spend money there, that shopkeeper pays their suppliers. The suppliers pays their employees.

We know that there’s a multiplier effect across the economy of about 7 fold.

Source – here from 107.05

7 fold!  7 fricken fold!  Are you kidding?

What he is say is that every dollar of government spending generates $7 of economic activity.  Holy freeholy.  With that kind of economic effect, the NSW Government should borrow every cent it can and spend it; and spend it on anything.  The NSW economy would boom, boom like Mr Searle’s economic logic.

Pardon TAFKAS’ French, but what an idiot.  More specifically, what an A-Grade idiot.

And what’s worse, Mr Searle appears to be of lesser intellect than his interviewers Wendy Harmer and Robbie Buck who did not even flinch when Searle made that statement.  And that dear Cats is an achievement in and of itself.

But not satisfied, Mr Searle decided to deeper implant his jackboot into his mouth with this:

Even if they (NSW Government) manage to somehow save the money by cutting the pay of public sector workers, there’s no guarantee this government will be able to put that money productively to use.

Source – here from 108.05

So.  Not increasing public sector salaries is a pay cut and spending that money elsewhere won’t deliver this 7 fold multiplier but giving it to public sector workers will.

Right.

Mr Searle.  The tribe has spoken.  It’s time to leave the Parliamentary island.

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39 Responses to Intelligence Litmus Test

  1. rickw

    Not an outlier.

    They’re basically all idiots.

    We’re living in an Idiocracy right now!

  2. Rex Mango

    That is almost as stupid as our current Defence Minister Linda Reynolds, when she said that we can integrate women into men’s sporting competitions.

  3. Free Radical

    mpc of 0.85 will give a multiplier of roundly 7.

    Seems reasonable.

    Ergo, TAFKAS leaves. The Tribe has spoken.

  4. iain russell

    Harmer and Buck. I must come up with an appropriate verse, including the rhyme ‘as dumb as f…’ Or ‘harmer and Buck were both dumber than f…’ etc

  5. @Free Radical

    mpc of 0.85 will give a multiplier of roundly 7.

    Apart from the fact that taxes are more than 15%, what would be the multiplier effect when the funds borrowed need to be repaid – with interest?

    But hey. Why not just increase public sector salaries by 100% or a million percent? It’s good for the economy. Why not a gazillion percent?

  6. Lee

    What he is say is that every dollar of government spending generates $7 of economic activity. Holy freeholy. With that kind of economic effect, the NSW Government should borrow every cent it can and spend it; and spend it on anything.

    Economics for Morons 101.

  7. Free Radical

    what would be the multiplier effect when the funds borrowed need to be repaid – with interest?

    For public sector salaries? What borrowings?

    Why not keep your gazillions to yourself? Your mention of them just makes your post even more ridiculous.

  8. Shaun

    Government paying $700,00 for something the private sector can do for $100,000, there’s your multiplier effect right there.
    But for some reason so much of the money just mysteriously disappears.

  9. Spurgeon Monkfish III

    his interviewers Wendy Harmer and Robbie Buck

    Incredible as it may seem, the latter is even stupider than the former. Tenured ALPBC imbeciles.

    BIRM.

  10. Roger W

    Clearly, Free Radical believes in the Money Tree, the Magic Pudding and Fairies at the Bottom of his Garden, all in one.

  11. wal1957

    what would be the multiplier effect when the funds borrowed need to be repaid – with interest?

    Free Radical…

    For public sector salaries? What borrowings?

    So you believe in the money tree just as the Greens leader does?
    Public sector salaries are part of State debt, how can you not understand that?

  12. Rob MW

    What he is say is that every dollar of government spending generates $7 of economic activity. Holy freeholy.

    What’s wrong with that ? I’m prepared to buy a share of the printing press to help get rid of council rates, stamp duty, registration fees, work cover premiums, wild dog rates, LLS rates, water rates, property taxes, gambling taxes, tolls, etc……. etc. It’s a good idea TAFKAS. Why would anybody in their right mind oppose such a brilliant piece of thinking ? – I mean, shit, everything would be free, no need for employers and employees, businesses and banks, just print $142,857,142,857.00 and instantly turn that into $1,000,000,000,000.00, job’s done.

  13. H B Bear

    Free Radical time to leave the sock drawer.

  14. Free Radical

    Public sector salaries are part of State debt

    Ignorance is bliss, huh?

    FYI: NSW Public Sector salaries and other operating costs are paid from recurrent revenues. Borrowings (State debt, as you term it) are used to fund Capital works.

  15. @Free Radical

    FYI: NSW Public Sector salaries and other operating costs are paid from recurrent revenues. Borrowings (State debt, as you term it) are used to fund Capital works.

    Let TAFKAS break the news to you. Money is fungible. Who says that operating costs are funded from revenues and capital works from debt. It’s all money in the same bucket. Perhaps it is the capital works that are funded by recurrent revenues and operating costs through debt?

    But accounting aside, and TAFKAS won’t go into the impairment of “capital works” expenditures on balance sheet, because of the economic carnage from WuFlu, the NSW government won’t generate sufficient recurrent revenue to cover operating costs let alone capex. How wouls you propose that salaries, even before increases, be paid for when there is not sufficient revenue through the door. NSW revenues from stamp duty, gambling, payroll tax – what’s gonna happen to them. And do you think the GST pool, even before the begging of QLD to get extras, will be bigger or smaller than previous.

    And when the RBA is buying up every semi-government bond it can get it’s hands on, do you think T-Corp is issuing paper to fund only Capex?

  16. Free Radical

    So many words, so little knowledge.

    We are back to the old saw of “everything goes into and out of the Consolidated Fund”? Ho hum.

    NSW State operating expenditures are financed from (you et al are confused by “paid from”) recurrent revenues, while Capital works are financed from (ditto) borrowings.

    TCorp? Lol. Red herring.

    You’re dot, aren’t you?

  17. tgs

    FYI: NSW Public Sector salaries and other operating costs are paid from recurrent revenues. Borrowings (State debt, as you term it) are used to fund Capital works.

    LOL

  18. Clam Chowdah

    It’s ‘holy frijole’.

  19. Terry

    Whatever “value”, if any, is derived by overpaying public servants, it is FAR less than the value-multiplier derived by the earners (taxpayers) keeping more of their own money and spending it far more wisely.

    The “economy depends on pissing more taxpayer funds into the public trough” argument is beyond stupid. Anyone making it should be ejected from their public sinecure immediately and their file marked: Never Again! We have enough morons in society without trying to hide them on the public payroll.

    We tolerate far too much stupid these days. Just flush and be done with them.

  20. These are the same people who claim increasing the minimum wage is good for businesses because people have more money to spend, hence businesses can then make more money.
    Why not increase wages by 100%, 1000%? Why not go straight to $10,000 per hour wages and instantly become the richest nation on Earth?
    The fact that such a simple concept seems to be so hard for these imbeciles to comprehend tells you the level of stupid we’ve promoted into positions of power and authority.

  21. Roger

    Clearly, Free Radical believes in the Money Tree, the Magic Pudding and Fairies at the Bottom of his Garden, all in one.

    He also believes an unspent credit card balance is a financial asset, not a liability on your balance sheet.

    Seriously.

  22. @Free Radical

    NSW State operating expenditures are financed from (you et al are confused by “paid from”) recurrent revenues, while Capital works are financed from (ditto) borrowings.

    What happens when there is insufficient recurrent revenues to fund operating expenses? As will no doubt happen this year and next at least.

  23. Tim Neilson

    What happens when there is insufficient recurrent revenues to fund operating expenses? As will no doubt happen this year and next at least.

    The excess opex will be reclassified and capitalised on the balance sheet. Problem solved!

  24. Free Radical

    an unspent credit card balance is a financial asset, not a liability on your balance sheet

    Just another bank account in the Current Assets section.

  25. Sydney Boy

    Farmer looks out into his field and counts 10 cows. Goes back inside and comes out 5 minutes later and counts 10 cows. Goes back inside and comes out 5 minutes later and counts 10 cows. Farmer now has 30 cows!

  26. Sydney Boy

    Why not increase wages by 100%, 1000%? Why not go straight to $10,000 per hour wages and instantly become the richest nation on Earth?

    Even better. Skip the middle man and allow people to print their own money. Profits!

  27. Free Radical

    Profits!

    Lol. You might be surprised at just how much money TCorp’s activities make for NSW. Very profitable.

  28. Squirrel

    Yes, it’s unspeakably awful and offensive that some of the highest paid public servants in the world might miss out on a 2.5% pay rise at a time when inflation is so low that some economists are worried about deflation, interest rates are the lowest in living memory, and hundreds of thousands of people who aren’t public servants have had their jobs/businesses smashed for “the greater good”.

    If this multiplier thingy works so swimmingly and cosmically well (has to be something special about something that works 7 times), why not cut State government taxes and charges by 2.5% and wait for the windfall of a 17.5% increase in economic activity?

    If the Legislative Council blocks the pay freeze, there should be a NSW taxpayers’ strike, until the public sector gets it through their heads that the world really has changed.

  29. @Free Radical

    Lol. You might be surprised at just how much money TCorp’s activities make for NSW. Very profitable.

    You mean like the “profit” the RBA makes? Borrowing at the NSW government’s AAA rating and then lending at a premium to other parts of the government is not a profit. It is whoring the NSW’s government’s balance sheet. If they didn’t make an accounting “profit” doing that, there is something wrong with them.

    Plus, $124m “profit” (what TCorp made last year) does not really touch the sides of the multi billion NSW government operating budget.

    But can you please answer the earlier question. What happens when there is insufficient recurrent revenues to fund operating expenses? As will no doubt happen this year and next at least.

  30. Free Radical

    Well, that’s a sadly simplistic view of TCorp’s success. Sure, the $124M surplus from activities is a good thing, as I pointed out to Sydney Boy, but you really don’t understand. What TCorp does that is most important is to arrange investments on behalf of the State in a way that ensures that the cash needs of government business are met, when those needs arise. It’s all about cash flow throughout the current year and across the forward estimates period. Simplistic and naïve in the extreme to suggest that the annual surplus is in any way intended to accommodate the NSW government operating budget.

    There are various ways for the government to ensure that your hypothetical “insufficient recurrent revenues to fund operating expenses” does not arise. So, I see no reason to address it. Happy, though, for you to specify which recurrent revenues and operating expenses might be involved in your hypothetical scenario, why and how they might be affected by it, and what their levels might be. Over this year and the next at least. You might also specify how much of those effects, if any, are specifically a result of the State’s COVID-19 experience and therefore subject to other that the usual recurrent revenue and expenditure budget requirements. I’d be happy for you to suggest that the net costs of dealing with COVID-19 cost, if any ($3B seems to be the amount in prospect), might be met by special medium to long term borrowings.

  31. Pingback: Only supply constitutes demand - The Rabbit Hole

  32. tgs

    Just another bank account in the Current Assets section.

    Moronic

  33. *All we need is debt and cashflow growing every year*

    Wal into a ban and say that as part of your loan pitch, you MMT degenerate.

  34. 2dogs

    multiplier effect

    While there is a multiplier effect on changes to real wealth, Keynesians tend to expect such an effect where it doesn’t exist.

    Their basic logical fallacy here is “reifying a classification”. Forcing expenditure to move from one classification to another does not increase real wealth (though it may decrease it), and has no positive multiplier effect.

  35. Diogenes

    Well, that’s a sadly simplistic view of TCorp’s success. Sure, the $124M surplus from activities is a good thing, as I pointed out to Sydney Boy, but you really don’t understand. What TCorp does that is most important is to arrange investments on behalf of the State in a way that ensures that the cash needs of government business are met, when those needs arise.

    In the 80s when I worked for what was then the MWSDB (now Sydney Water), Treasury grabbed all the daily receipts from ALL govt & NSW QANGOs (the old County Councils (electricity) and Water were the biggies) , and had use of the money for 30 days, when it was returned to the QANGO to pay its way. Treasury did not pay interest for the 30 days it had use of the money, and was widely reputed to ‘play’ the money markets. IIRC there was a serious proposal (David Hill / Shifty Nifty) to do the same to council revenues.

  36. Free Radical
    #3466709, posted on May 28, 2020 at 7:36 pm
    Well, that’s a sadly simplistic view of TCorp’s success. Sure, the $124M surplus from activities is a good thing…

    None of that explains to me how the Commonwealth Government borrowing another $500 billion and giving a large cut to the states adds $3.5 trillion value.

  37. Free Radical

    None of that explains to me how the Commonwealth Government borrowing another $500 billion and giving a large cut to the states adds $3.5 trillion value.

    That could be because the discussion has not been about the Commonwealth.

  38. Free Radical

    And while I’m here.

    In the 80s when I worked for what was then the MWSDB (now Sydney Water), Treasury grabbed all the daily receipts from ALL govt & NSW QANGOs (the old County Councils (electricity) and Water were the biggies) , and had use of the money for 30 days, when it was returned to the QANGO to pay its way. Treasury did not pay interest for the 30 days it had use of the money, and was widely reputed to ‘play’ the money markets.

    That’s not how it worked, then or now. The NSW Public Finance and Audit Act stipulates that all revenues (daily receipts, etc) must be paid into the Consolidated Fund and all payments must be made from the Consolidated Fund. Standard invoice payment terms are 30 days across all NSW Government Departments and Statutory Bodies, unless contract terms (eg. for capital works), specify otherwise. No moneys were then or are now “grabbed” by Treasury, held to “play” the money markets, and returned to quangos 30 days later. Part of the NSW Treasury, back in the 80s, had much the same financing role as TCorp now has (see my previous comment).

    IIRC there was a serious proposal (David Hill / Shifty Nifty) to do the same to council revenues.

    The famous “hollow logs” strategy. Wran’s Ministerial Advisory Unit (principally David Hill and Nigel Stokes) discovered that many NSW Statutory Bodies, including the electricity Commission and the MWSDB/Sydney Water, were illegally hiding reserve funds (totalling $230M+) off balance sheet in secret reserve accounts. Treasury and the Statutory Bodies argued against it, but they were forced to use those secret reserves instead of continuing to receive supplementary funds from the State Budget.

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