The NLP is responsible for gross economic mismanagement

[pietillidie]

Mugwump, you talk as if all these twits have to do is turn up because there's nothing they can do to improve anything even if they tried.

And if there's nothing they can do, why do you even care?

The fact is you do care because you spend so much time reacting to anyone who questions the present order, but you're not declaring what you care about because your interest is in maintaining the status quo. If you express your views overtly, it damages your reputation, and makes you responsible later on when plainly manageable things which were not dealt with decline further. By not outright stating your position, later on you can utter vague notions that you were "concerned" and "more should've been done", or the matter "could've been better handled", as you did with Iraq and Afghanistan, or the NBN, or this commodity cycle, or the oil economy which is destroying the Middle East and is the chief funder of terrorism.

In other words, as a status quo conventionalist whose interests are served by the present configuration, you can pretend to be moderate because you don't have to critique anything or propose anything, or state your views directly. Once the damage is done, no one remembers you played a spoiling role or sat on your hands, and you can quietly slip across to the new conventional position, as if it were always your view.

Thus, when it comes to the Abbott suite of policies, all you have to do is shrug your shoulders and say nothing can be done. The reality is, though, you don't want anything done because you approve of them, and you want to retain the hedge of plausible deniability lest you be blamed for their deleterious effects. You lack the courage to say that you don't care about declining real wages or the cost of education because the present order benefits you as it is, thanks very much.

To hold a view that nothing can be done about falling real wages, or to smooth over the commodity cycle, or to better protect the Great Barrier Reef, or to make housing more affordable, or to provide better-paying careers to a better-skilled workforce is a pretty ugly and contemptible position when it is expressed honestly.

In reality, the caravan park management who didn't bother to ready their tarpaulins for cyclone season are negligent and callous. They knew the leak was getting bigger and people could be injured in the tempest, but they were safe and personally benefited from skimping on maintenance, repairs and upgrades. And you, in fact, support them, but you're too embarrassed to say so.

[Mugwump]

[Tannin]

1: It's not a ruse, Mugwamp. Abbott and his motley crew were a very significant part of that economically stupid government. We can't sheet home all of the blame for the Howard Government's mistakes to Hockey, Bishop, Abbott, and the rest of that very long list of members and ministers I provided earlier, but they were about half of that lousy government. They voted in the Party Room, they sat in Cabinet meetings, they were part of the strategy committees, they were intimately involved. This is a historical fact.

2: The cyclical mining downturn is not their fault. (Yes, I'm agreeing with you on this.) The severity of the effects of the downturn, however, is something that they do bear responsibility for.

2a: They (as part of the Howard schmozle) put far too many eggs into mining and failed comprehensively to (a) nurture counter-cyclical industries like (e.g.) education, engineering, and manufacturing.

2b: They (as part of the Howard schmozle) wrecked the taxation & expenditure system by crippling tax collection from the wealthy, doing nothing whatever to safeguard revenue against massive fraud from the likes of Ikea, Apple and Google, and pissing vast fortunes up against the wall of middle-class welfare.

2c: Also as part of the Howard schmozle, they were complicit in the greedy stupidity of grossly over-valuing domestic real estate and thus overseeing (i) the massive indebtedness of Australian households - highest in the world if my memory is correct - and (ii) the diversion of vast amounts of investment into non-productive wasted assets.

(Note that Rudd did little to correct these errors, and Gillard had no opportunity to do so - whether she would have done so with a decent majority (i.e., without the Rudd treachery) will never be known.)

3: On regaining government, Abbott's mob committed a series of major economic blunders. The significant rise in unemployment since Abbott came to power is not mostly a result of the cyclical downturn in the mining industry - mining employs very, very few people. When Abbott came to power, for example, the entire coal industry employed only half as many people as the renewable energy industry. Abbott has "fixed" that, of course - last year alone, 88% of the renewable energy projects in the pipeline were canceled or put on indefinite hold because of Abbott's policies, and his beloved coal industry is also going down the gurgler because no-one wants to buy it anymore. ($50 a ton and heading lower.) By slashing government employment, deliberately crushing the car industry, and failing to deliver any of the blood-oath promised infrastructure projects Abbott and Hockey have done everything they can to stymie economic growth.

No, they didn't cause the downturn. They just made it worse. Most of the effects of this mismanagement, unfortunately, won't come home to roost for quite a while yet, but the signs of it are already plain to see. Unemployment up, growth down, average earnings down, deficit up. It's a straight fail.

[Mugwump]

[Mugwump]

[Wokko]

Something that doesn't get much airplay that you can firmly place on the coalition is Costello selling off our gold reserves just before the gold price soared. Nice one idiot.

[Tannin]

^ I agree with most of that Mugwamp. Rudd/Swan/Gillard did indeed perpetuate most of the economic sins of Howard. Rudd did, however, have a crack at fixing some of the problems - the NBN and his mismanaged but well-meant mining tax are the best examples. Nevertheless, once we set aside his outstandingly successful response to the GFC (for which I mainly credit Fraser and Swan - it's hard to credit the appalling Rudd with anything of value unless you absolutely have to), in the main, Rudd failed to deal with the major underlying long-term problems.

I'm not convinced by your mining "stimulation" argument, however. The flow-on stimulation effects from the (very small number) employed in mining are valid, but if we consider those, then we must equally consider the flow-on effects of employment in other industries. This is why Abbott's gutting of the public service was so stupid - for every thousand public servants you put out of work, you lose five or ten thousand jobs. The same with the car industry, the education sector, healthcare, science, manufacturing, renewable energy - all sectors Abbott has crucified. As a retailer, I don't care whether the chap who buys a computer from me is a teacher, a miner, or a public servant, just so long as he has a job and can afford to pay me.

In particular, I don't buy the "influx of foreign capital" argument. It's fool's gold. That capital is only coming in because the foreign company bringing it in fully expects to take out far more than that sum over the next few years, and take away more of our irreplacable natural resources with it. They don't pay any tax worth mentioning (the mining industry accounts for 30% of company profits in Australia, but only pays 15% of the tax - even less than that when you remember that the royalties they pretend are "taxes" are nothing of the kind, they are heavily discounted purchases of raw materials belonging to the nation).

Further, that very same influx of capital, if it is not managed properly (none of Howard, Gillard, and Abbott have even tried; Rudd tried a little bit and failed miserably), does huge damage to the economy. Export industries (agriculture, education, manufacturing, IT services, and so on) get hammered by it; import competing industries (manufacturing, services of many kinds, agriculture, and others) go to the wall.

You last para I fully agree with.

As for Abbott's government, while I agree with those who say its economic performance has been poor, in my view its economic failings pale into triviality beside its major failings, which are (not in order) in the areas of education, science, civil liberty, communications, respect for the Westminister System, environment, the rule of law, health, taxation policy, and climate change. In all of these areas, the damage has been worse than the economic damage, at least so far.

[HAL]

I never noticed that similarity.

[Tannin]

[Mugwump]

[Wokko]

Costello sold off 2/3 of our reserves @ $306 an ounce, it's currently at around $1500. Your shares are still yours, and if the stock market tanks then gold will make a comeback, can't do anything about a dud sale though.

[Tannin]

Yep. very long way back to 88c though. The stupid thing is that I bought them for 50c, sat on them while they wooshed up to 87c, ten sold for a tidy profit. Then I had second thoughts, panicked, and bought them straight back again on the open the next morning for 88c, sat back waiting for them to climb towards $1 or $1.20 ... and watched them slide all the way down to where they are now. Dumb! No point in selling them now, the damage is done. I could have bought a new lens with that money!

[Tannin]

This seems apropos:


Abbottonomics: a bizarre new take on jobs


Tony Abbott: Well I don't accept that. The boats have stopped. The carbon tax has ...

Leigh Sales: We're talking about the economy.

Tony Abbott: The boats have stopped …

The scariest​ thing about Tony Abbott's attempts to link stopping the boats to his economic strategy is that he means it. The Prime Minister really does see the world through the prism of border security, and in turn, it follows that he might believe that "stopping the boats" would help create jobs. The problem for those in the growing ranks of the unemployed, however, is that just because the Prime Minister believes it, doesn't mean it will work.

Economists have never been able to agree about what causes unemployment or what fixes it. While there is some common ground, fights about whether high wages, low levels of private sector demand or poor government policy drive unemployment have been going on for hundreds of years and, I suspect, will not be resolved soon.

But for all of the fights amongst economists, and all of the papers and books that have been written about the causes of unemployment, few if any have tried to link tackling unemployment to the use of the military in turning back boatloads of people seeking asylum. It's an interesting thesis, and one that deserves to be tested.

When economists talk about how policies (like turning back asylum seekers) impact on outcomes (like unemployment) they usually start by thinking about what the "causal link" or "transmission mechanism" might be. That is, when you poke an ants' nest (a new policy) and the ants bite you (the outcome) the likely transmission mechanism is the ants' natural defence mechanism. What then might be the causal link between how a government treats refugees and how many jobs are created in the economy?

Conservative governments often argue that high minimum wages or penalty rates cause unemployment. Leaving aside all of the evidence that some countries with high wages have low unemployment and some countries with low wages have high unemployment, there is no absolutely link between asylum seeker policy set by Tony Abbott and the minimum wage set by the Fair Work Commission.

Another favourite of the Coalition is to claim that the conduct of unions and the existence of worker protections such as unfair dismissal laws are the "cause" of unemployment. Again, it is impossible to see a causal link between the existence of the "turn back the boats" policy and the Senate's willingness to pass new industrial laws.

There is, however, one "transmission mechanism" that the Prime Minister might plausibly argue links his obsession with the treatment of refugees with the economic problem of rising unemployment, and that is "confidence".

While many economists and politicians like to talk about economics as if it is a "hard" science, in reality some of the most important variables in economic analysis like "consumer confidence", "business confidence" and "market sentiment" are loosely defined and impossible to measure. All of those terms are simply econobabble for "feelings".

But while you could argue that "stopping" the boats might boost consumer and business confidence, it is hard to argue that bombing Syria will. If confidence is what drives employment growth, and it is confidence the government was trying to restore, then it makes sense to look at the impact of all coalition policy on market sentiment more generally. It's not pretty.

The fact that it is impossible to accurately measure the feelings of 24 million people doesn't mean economists don't try. And since Tony Abbott was elected the Westpac-Melbourne Institute Consumer Sentiment Index of consumer confidence and the National Australia Bank survey of business confidence have both fallen significantly. While it's possible that "stopping the boats" helped boost confidence, if it did, any positive impact was clearly swamped by other factors.

If the government was focussed on boosting confidence, then declaring the existence of a "budget emergency" was an unusual way to go about it. Shedding 11,000 public sector jobs in a slowing economy may have significantly reduced government outlays but it also significantly reduced the number of pay packets in communities around Australia.

Most economists believe cutting public spending when the economy is slowing leads to increase in unemployment which is, of course, exactly what has happened. The Prime Minister and the Treasurer completely disagree with that assessment. Someone is wrong.

Of course, it's not just the Abbott government's previous budgetary policy that has led consumers and investors alike to keep their wallets in their pockets. Talk of increasing the GST to 15 per cent does little to make those struggling to make ends meet feel like things are on the up. Similarly, trying to make young people wait one month (down from an originally proposed six) before they can receive unemployment benefits makes not just the kids, but their parents, rightly nervous.

On the business front, the Abbott government has both raised, and then dashed, the hopes of small business people who were hoping for changes to the competition laws to help them in their dealings with big firms like Coles and Woolworths. Similarly, having promised there would be no changes to the Renewable Energy Target, the government reneged and, pardon the pun, took the wind out of one of the fastest growing industries in the economy.

In reality the reason that Tony Abbott talks about asylum seekers when he is asked about the economy has nothing to do with consumer confidence. He simply likes talking about it, and has previously confessed to believing that economics was boring.

The problem for all Australians, however, is that while confidence is central to economic performance, fear is at the heart of the Abbott government's political strategy. Making Australians feel afraid of asylum seekers, afraid of terrorists and afraid that we might be drawn into wider military conflicts might poll well, and "wedge' Labor, but it does nothing good for our economy in the short term and nothing good for our national cohesion in the long term.

In response to the phoney budget emergency, the Abbott government cut both spending on both aid and diplomacy. Not only did such cuts harm our domestic economy, they impeded our efforts to make the world a safer place.

Australia is still one of the richest countries in the world. We still have low levels of public debt and the budget deficit represents a small proportion of GDP. That said, all of the major economic indicators are moving in the wrong direction. Tony Abbott came to power promising to fix things, and fix them fast. He has failed, and there is little doubt that his first budget made things worse not better.

But the Prime Minister also promised grown-up government. Managing the national economy in government is harder than managing the media when you are in opposition. Grown-ups who want to solve problems must first admit they have problems. Children make excuses and blame their siblings. Stopping the boats has nothing to do with rising unemployment, and while new wars and heightened threats from terrorism might distract people from the economy, they will likely drag it down at the same time.

Richard Denniss http://www.theage.com.au/comment/abbottonomics-a-bizarre-new-take-on-jobs-20150911-gjk8eb.htmlbusiness confidence

[Mugwump]