The stimulus: just how big is it?

March 26, 2009

No wonder Kevin Rudd got such an enthusiastic reception in Washington. Given our size, he’s spending nearly as much money as Barack Obama.

The Rudd government also spent this week talking about how good its new FOI laws are. What they didn’t tell you was:

If you think we’ve been a bit hard on Barack Obama lately, you can relax.

This week we’re picking on Gordon Brown instead. On Tuesday there was this fantastic speech (it’s three minutes long) by a British MEP in the European Parliament. Even better – you’ll see that Gordon Brown had to sit in the chamber and cop the whole thing.

Worried about the new protectionism? The IPA is co-sponsoring an international petition supporting free trade. You can show your support here.

Finally, you can read my piece from the Australian Financial Review last week about the real purpose of our PM’s overseas jaunts. And in the Herald Sun, Alan Moran talked about why a solution to the crisis is further away than ever.

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Want a bank account? Vote 1 ‘The Government’

March 19, 2009

If you weren’t already convinced that nationalising banks was a terrible idea, then read this story in the UK Spectator: The newly-nationalised Royal Bank of Scotland is now insisting that its customers take political tests. As Spectator writer Fraser Nelson reflects, “in Britain, one is never required to discuss one’s political beliefs” – that is until politicians start to control the economy.

This week the IPA hosted Jerry Jordan, a former member of the US Federal Reserve. He raved about Amity Shlaes’s 2007 book The Forgotten Man: A New History of the Great Depression. I haven’t read it yet, but it seems that everybody I meet recommends it. It’s a comprehensive rebuttal of the popular idea that the US government saved the world from the dangers of free markets.

(The Forgotten Man will be reviewed in the next edition of the IPA Review, but as a teaser, here’s a review in the International Herald Tribune. And I highly recommend Amity Shlaes’s blog, particularly her discussion about the different views that historians and economists have about the success of FDR’s New Deal.)

So do we really need a New ‘New Deal’? The economic historian Robert Higgs convincingly makes the case that Roosevelt made the Depression worse by eroding investor confidence – something that Kevin Rudd and Barack Obama should think about before continuing down their path of crude economic populism.

And what should you be allowed to see on the internet? If the Australian government implements its internet filtering plan, then not only will you be stopped from looking at otherwise legal websites, but you won’t be able to even discuss what sites are censored. The communications regulator is threatening people who simply link to blacklisted sites with a massive $11,000-a-day fine. Of course, the government hasn’t quite answered the question of how you are supposed to know what you are doing, if the blacklist itself is a secret.

In the Australian Financial Review, the IPA’s Alan Moran argued that government spending isn’t the solution to the financial crisis: “We can’t spend our way out of this one“. And in The Age, Chris Berg wrote that “More police, fewer daft ideas, is the answer to city violence“.

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Is it 2009 or 1984?

March 12, 2009

Two days ago the federal government unveiled its climate change legislation. Here’s a few things I bet you didn’t know about it.

The Carbon Pollution Reduction Scheme Bill (all 374 pages of it) says if you’re suspected of emitting too much carbon:

Do suspected terrorists now have more rights than carbon emitters?

But wait…there’s more! Your right to privacy has also been abolished. The government can pass on private information about you to practically anyone it wants, including foreign governments (clause 48-1(r)), and the United Nations (clause 48-1(s)). (This bit is in another piece of legislation – the fantastically named Australian Climate Change Regulatory Authority Bill.)

Don’t take my word for it. Read it yourself here.

The legislation isn’t just draconian. It’s Orwellian. Maybe MPs haven’t actually read the legislation. Or (and this is more frightening) maybe they have read it and they don’t care.

After all of this let me cheer you up. Ayn Rand is making a comeback! Here’s an interesting piece published this week from of all places, Britain’s most left-leaning newspaper The Guardian.

And remember Arthur Laffer? The ‘father of Reaganomics’ and the ‘Laffer curve’? He’s still going strong. Here he is being interviewed on Bloomberg on Monday about the economic crisis (the clip is about 7 minutes long.)

If you want to know what the IPA thinks of executive salaries and the confected outrage over Pacific Brands you can read me in the Australian Financial Review or Julie Novak on ABC Unleashed. If you want to know why state governments should cut taxes read the IPA in The Age from Tuesday or today’s The Australian. And finally if you want to know why we should all relocate to New Zealand read Professor Tony Makin’s piece in The Australian from yesterday.

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The recession in pictures

March 5, 2009

If you want proof that giving people cash handouts won’t keep Australia out of recession here it is – in a picture.

This graph prepared by Alex Robson of the ANU and Concept Economics following the release of yesterday’s GDP numbers shows that while growth in Australian household income has gone up (due to the stimulus package), growth in household consumption spending is down. People are saving the handout – they’re not spending it.

If you want to get technical this graph supports what economists call the ‘permanent income hypothesis’. Basically it means that people are smarter than governments. People are not going to spend short-term one-off bonuses if they think they’ll need the money later on. This is the point that John Taylor of Stanford University made a few weeks ago when he was interviewed on the ABC’s Lateline. (I’ve previously sent you the link but if you’ve lost it, it’s here.)

Last weekend The Australian published two important articles on the economic crisis. The first was by one of Australia’s leading economists Henry Ergas and the second by Niall Ferguson, the best-selling British economic historian.

I often get asked ‘what are you reading at the moment?’ I’m currently working my way through Team of Rivals about Lincoln’s cabinet. Barack Obama read it and apparently it was the motivation for him to make Hilary Clinton Secretary of State. Scott Hargreaves reviews it in the latest IPA Review.

Keeping with the historical theme one of my favourite books last year was The Pursuit of Glory: Europe 1648 to 1815 by Cambridge history professor Tim Blanning.

The chances of the government introducing an ETS decline by the day. If you want to know why, read Tom Switzer’s op-ed from yesterday in The Australian. And in The Age Tim Wilson argued that now is not the time to turn our back on free trade, and Chris Berg argued that now is not the time to shut our doors to immigration.

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