Slumdog Millionaire a win for capitalism

February 26, 2009

I haven’t seen Slumdog Millionaire yet – but I will. Apparently it’s a bit of a morality tale about the benefits of capitalism. Reason TV in America have made a short video (six minutes) about the economics and politics of the movie.

As every day passes we’re finding out how the government is making it up it as it goes along. Yesterday in the Senate economics committee, treasury officials revealed that the 50,000 jobs supposedly saved by the federal government bailing out commercial property developers was a figure pretty much plucked out of thin air. It was a guesstimate based on job losses in previous downturns.

Everyone’s in a flurry about an emissions trading scheme versus a carbon tax. The IPA’s argued for years that if we are going to have government-enforced cuts to carbon emissions then a tax is better than an ETS. Six months ago in The Age, IPA Research Fellow, Professor Sinclair Davidson said it, and the IPA submission to the Garnaut Review in September last year also said it.

Talking about the ETS, the IPA’s Jennifer Marohasy and the Australian Environment Foundation are organising a community petition. If you’d like to sign it go to www.listentous.org.au.

One of the IPA’s favourite economists is Tyler Cowen, a professor of economics at George Mason University in America. His latest book is called ‘Discover Your Inner Economist: Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate your Dentist‘ and his blog is at www.marginalrevolution.com. Tyler’s piece from the New York Times on how the recession will change people’s attitudes is worth reading.

If you want to know the IPA’s take on the Queensland state election you can read Julie Novak’s op-ed in the Courier Mail from Tuesday. This week we’ve also talked about what FDR actually did during the Great Depression, and the success (or otherwise) of the country’s business lobby groups.

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Obama as we feared

February 19, 2009

Two weeks ago the IPA was attacked in the Victorian Parliament for being in favour of free trade! As the IPA’s Tim Wilson pointed out in the Business Age last week, sadly we are seeing a sudden resurgence in protectionism.

None of my friends believed me when I told them that McCain would be a better president than Obama. Sure, McCain had some issues (he wanted the government to buy everybody’s mortgage!) but at least he is a free trader. Obama isn’t. In the US stimulus package President Obama signed yesterday, there’s a requirement to ‘Buy American’. I looked up the 407 pages of the actual legislation and read it for myself.

Sec. 1605. USE OF AMERICAN IRON, STEEL, AND MANUFACTURED GOODS. (a) None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States.

To get an exemption requires special departmental approval!

It’s no surprise that the US Chamber of Commerce are furious. If only Australian business was as quick to defend free markets.

At least the Americans have a sense of humour about it all. I liked this short audio clip from the satirical newspaper The Onion: “Roiling Mass of Snakes To Receive $160 Billion In Government Stimulus“.

And finally. As bizarre as it might sound the IPA can recommend a segment from the ABC Lateline program. It was an interview on Monday night with Professor John Taylor of Stanford University on why tax cuts are better than cash handouts.

For a sneak preview of what’s in the next IPA Review you can read Chris Berg’s take on our Prime Minister’s philosophical forays: “Keeping up with Kevin: Kevin Rudd’s testosterone technocracy“.

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Stimulus package won’t work

February 12, 2009

Last week’s horrific bushfires have shocked and saddened us. Please consider donating to the Red Cross Bushfire Appeal.

While our attention and thoughts have rightly been on the bushfire tragedy, debate about the government’s stimulus package continues.

On Monday the IPA’s Professor Sinclair Davidson gave evidence to the Senate inquiry on the stimulus package. He was the only person who recommended outright rejection of the package. His testimony is available in Hansard.

Sinclair referred to this significant oped in the New York Times by Greg Mankiw of Harvard University – one of America’s leading economists.

You can count on the fingers of one hand the number of academics and business economists in Australia who have argued against the stimulus package. In America there’s a similar debate going on – but people are less afraid to speak out – here’s a brilliant newspaper advertisement from our colleagues at the Cato Institute in Washington.

I wish I could say I was surprised when I saw the Treasury Secretary Ken Henry admit that the government had no idea whether the stimulus package will actually work.

For recent IPA commentary on the stimulus package, you can read Julie Novak’s piece in The Australian Slaves to Keynes saddle us with debt‘ last Friday, my regular column in the Australian Financial Review also last Friday, ‘Rudd’s rush is unseemly‘ and Alan Moran’s piece in the Herald Sun of last Saturday, ‘Rudd’s plan a dead weight on the future‘.

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Rudd blames IPA for neo-liberalism

February 5, 2009

It was great to read in the Prime Minister’s now famous (infamous) essay in The Monthly that the Institute of Public Affairs gets the credit for neo-liberalism in Australia. (So great, in fact, that we put out a press release on it!)

The policies of what the Prime Minister calls ‘neo-liberalism’ have provided unprecedented prosperity for Australia and the world over the last 30 years.

If you want to know what the rest of the world thinks of the PM’s essay, have a look at the Asian Wall Street Journal‘s editorial.

Malcolm Turnbull’s opposition to the ‘stimulus’ package is a political risk (never stand between Australians and free money!) But $42 billion won’t just magically fix the crisis. If you want to know why, read the IPA’s Julie Novak in the Canberra Times yesterday: “Rudd throws out the baby“.

Finally, if you’ve got time to read something a bit longer about what’s going on in America, you’ll be interested in this really good piece from our friends at the New York-based City JournalCan the Feds Uncrunch Credit?“.

For more IPA commentary on the government bailouts, read Chris Berg’s piece in the Sunday Age: The bail-out disease“. And in the Australian Financial Review, Alan Moran critiqued the government’s crude Keynesianism.

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