How are the ‘adults’ managing our economy?



Who will ever forget the insults, the slurs, and the slander that the Coalition heaped upon Kevin Rudd, Julia Gillard and Wayne Swan as they managed the economy through the Global Financial Crisis and beyond? They were depicted as children playing games in their political sandpit with no idea of what they were doing, making one catastrophic mistake after another.

Remember how the Coalition boasted that the children should get out of the way and let the adults take over, insisting as they did that they were the experts at economic management. So convincing was the rhetoric that the electorate believed them and has consistently rated them as superior to Labor in economic management in opinion polls.

Recall the ‘debt and deficit disaster’, a mantra with which they assailed Labor for years. Remember the ‘intergenerational debt’ they accused Labor of accumulating.



Since their election in 2013 they have had their chance to show their much-vaunted expertise under the skilled management of Tony Abbott and Joe Hockey, and then Malcolm Turnbull and Scott Morrison, with Mathias Cormann a consistent shadowy presence. How have they done?

I am indebted to one of our most astute political commentators, Bernard Keane, Crikey politics editor, for the best analysis I have read of the Coalition’s economic performance over the last four years. You can read it in its entirety in his article in the April 3 edition of Crikey: How the deficit was blown: The Coalition’s $100 billion bill.

I have drawn heavily on Keane’s analysis and have quoted from it substantially. Here is an abbreviated version of it. Sit down before you read it, and have a tranquillizer handy.

Keane begins:
”Since its election in 2013, the Coalition has given away $46 billion in political decisions, and signed the Commonwealth up to $50-60 billion in long-term spending that will hammer the federal budget for decades to come. (My emphasis.)

“The 2013 Pre-Election Fiscal Outlook, produced independently by Treasury and Finance, forecast a return to surplus this financial year and net debt peaking last year at $219 billion.

“The Coalition’s first budget forecast a return to surplus in 2018-19 and net debt peaking at $264 billion.

In MYEFO at the end of 2016, the budget was forecast to be still $10 billion in deficit in 2019-20, when net debt would be $364 billion.
Can you believe that after their promise to return the budget to surplus this year, and their assurance that net debt would be confined to $219 billion last year, the ‘adults’ subsequently told us that the budget would not return to surplus until 2018/19, and later that in 2019/20 we would still have a $10 billion deficit and that net debt would balloon to $364 billion, twice as high as Labor’s deficit ever was! No wonder the ratings agencies are breathing down their necks! And they still claim that the situation would have been much worse had Labor still been in government!

While Keane acknowledges that much of the spectacular deterioration of the budget under the Coalition is due to revenue write-downs, he asserts that “the government has worsened its own position through a series of political and ideological decisions that give the lie to its claims to be the victim of an irresponsible Senate”. He details the substance of those decisions as follows:
  • an $8.8 billion gift to the Reserve Bank to make the 2013-14 budget deficit look worse, and earn future dividends for the government.
  • Repeal of the carbon price cost the Commonwealth around $12.5 billion in lost revenue over the forward estimates and at least $1.8 billion per annum beyond that (based on a conservative estimate by the Climate Institute, lower than the government’s own estimate)
  • The government’s company tax cuts agreed last week will cost $5.2 billion over the forward estimates.
  • Repeal of the mining tax – despite the government’s claims that it raised no money – cost it $3.5 billion over the forward estimates, according to budget papers.
  • The reversal of Labor’s changes to Fringe Benefits Tax reporting requirements to end the rorting of novated leases cost, by its own admission, $1.8 billion over the forward estimates.
  • Income tax cuts for middle- and high-income earners cost $3.8 billion.
  • The ineffective Emissions Reduction Fund so far is costing $2.55 billion, although the government has decided no further funding will be wasted on it.
  • A Northern Australia Infrastructure Fund, established with no effective oversight, assessment or evaluation mechanisms and flagged as a funding source for unviable coal mining projects, will cost $5 billion.
  • A National Water Infrastructure Development Fund established as a funding source for Barnaby Joyce’s obsession with building more dams, is costing $0.5 billion.
  • A scheme to prop up dairy farmers threatening to desert the National Party, via the discredited means of concessional loans, is costing $0.55 billion.
  • Australia’s continuing participation in Middle East military ventures has so far cost $0.72 billion since Tony Abbott sent Australian forces back to Iraq in the name of fighting the “existential threat” of ISIS.
  • The government is spending $0.24 billion on a school chaplains program, although further funding has been halted for now.
  • Nick Xenophon extracted an additional $0.37 billion worth of conditions as price for his support for company tax cuts last week.
Keane lists several significant costs beyond the forward estimates from a number of other government measures:
  • The disastrous F-35 joint strike fighter program will cost taxpayers at least $17 billion over the period to 2023. There are new problems with the aircraft that are not being addressed or are worsening, and with no guarantees the cost will not escalate further.
  • The government’s decision to reverse the Abbott government’s approach and construct the new generation of Royal Australian Navy submarines in Australia is expected to add up to 30% to the $50 billion cost of the program in order to provide less than 3000 jobs in South Australia.
  • The company tax cuts agreed last week will cost $25 billion over ten years, although the government remains hopeful it can increase that cost to $50 billion! although there remains no evidence from anywhere in the world of any economic benefit from company tax cuts. (My emphasis)
  • The continuing fiscal impact of some of the above measures beyond the forward estimates will cost the budget, on a conservative estimate, $6 billion per annum (unindexed)
  • .
Although some of the decisions were backed by Labor such as the submarines decision, which will cost the taxpayers many billions of dollars, the F-35 purchase, and the income tax cuts, “these decisions are in defiance of evidence, represent the triumph of ideology over reason, and in many cases were rankly political." (My emphasis)

Worse, some of them are likely to generate new waves of spending: the removal of an effective, cheap carbon price in 2014 created an energy policy vacuum that led directly to the current energy crisis and proposals from the government to spend billions of dollars re-entering the power generation industry.

Our military involvement in the Middle East looks set to increase, not decrease, in coming years.

The cost of poor decision-making will be borne by taxpayers for years, even decades, to come.” (My emphasis)
It would be hard to imagine a more condemnatory account of the Coalition’s ‘adult’ management of the nation’s economy in the four years since 2013. Its predictions have all been wrong. The ‘adults’ have steadily worsened the nation’s fiscal situation. The 2019-20 budget is projected to still be $10 billion in deficit, the promised surplus is nowhere in sight, and the nation’s net debt is projected to be $364 billion, twice as high as it ever was under Labor!

In an update in Crikey Weekender: Seven new terrible economic records ScoMo set in March - Scott Morrison has some new records to add to his quest to be known as Australia's worst treasurer reads: "The Office of Financial Management released figures last week showing gross borrowings at $484.6 billion. Of this, $58 billion is residue from the Howard government or its predecessors. Labor increased it by $212 billion. Another $214.6 billion has been added since the 2013 election. Hence the Coalition has now more than doubled Labor’s gross debt, in three years and six months. It doubled Labor’s net debt in January."



The unavoidable conclusion is that this ‘adult’ government is economically incompetent, driven by its conservative rump, quite unable to see its way through the nation’s economic difficulties, incapable of analyzing the economic situation, inept at deriving solutions, bereft of planning ability, and hog-tied by ideological constraints. Moreover, it is so unutterably arrogant that it cannot see its ineptitude. And even if it could, would it be capable of doing anything about it?

As a substitute for informed opinions, all we get is self aggrandizement and platitudes from Turnbull, and a torrent of meaningless drivel from the Coalition's two motor-mouthed financial Daleks: Morrison and Cormann.

How has it come to this with the adults in charge?


What do you think?
What is your assessment of Scott Morrison as Treasurer?

Should he be replaced?

If he needs to be replaced because of incompetence, who should replace him?

Let us know in comments below.

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The tale of two Daleks



Good Daleks are hard to find. They’re expensive. But for the Treasury and the Department of Finance, no cost is too high. So they spared no expense in their search for reliable Daleks that could repeat their messages tirelessly. They had hoped to find some with a rudimentary knowledge of economics and some understanding of finance, but had to settle for ones that at least could recite mind-numbing messages repeatedly and consistently.

After a long search, and after discarding some defective ones that seemed incapable of learning their lines, they settled on DM and DC as their primary Daleks, and KO’D as a trainee.

DC had had previous experience in finance, and had been programmed so often to repeat the same words and phrases that he needed no further programming. He was brilliant. No matter what the question, he would repeat the same mantras and catchphrases with his inimitable accent, which had an insistent Germanic tone to it. Indeed, he was so good that he became a tutor for DM who previously had been used in Immigration. DC tried to tutor KO’D, but gave up – she was too inclined to go off-message.

When DM was in Immigration, he had been programmed to repeat ‘Stop the boats’; ‘We’ll turn the boats around when safe to do so’; ‘We don’t discuss on-water operational matters’; ‘This government is not running a shipping news service for people smugglers’; ‘We are running a military-led border security operation which is stopping the boats’; and ‘We’ve taken the sugar off the table’.

When he was used in Social Services he would repeat: ‘The age of entitlement is over’, a mantra used by another Dalek, discarded because he was past his expiry date and had been exported second-hand to the US. It must have been an oversight, but DM was not programmed to label people as either ‘lifters’ or ‘leaners’.

The programmer of these Daleks was so skilful that they always repeated the same phrases, word perfect, again and again and again, so much so that anyone remotely interested in politics could recite them by heart. Some voters, too wedded to political discourse on TV for their own good, slowly became obsessive-compulsive, and sat in their corner of the psychiatric ward muttering the lines they had heard so often. “Jobs and Growth’ was so imprinted that it was impossible to erase this mindless utterance. Every time the TV was turned on, there were the Daleks regurgitating their lines, over and over, monotonously, word perfect.

What’s more, they were carefully programmed:
  • to talk quickly, as if firing verbal bullets’;
  • to talk loudly;
  • to talk incessantly;
  • to repeat their words over and again;
  • to talk over their interviewers, and ’never take a breath’;
  • to avoid answering questions they didn’t like’; and
  • to answer such questions with “I don’t accept your characterisation".
The programmer guaranteed that with such tactics it would be impossible to ignore them, impossible to escape them.


Joseph Goebbels knew that if you told a lie often enough, the people would eventually believe it. What’s more, he knew that the bigger the lie, the more the people would be drawn to it. The Dalek programmer knew this too, so it was of no consequence if the words he programmed into the Daleks were wrong, were untrue, were senseless, or had no meaning, so long as they served a political purpose.

Any new device needs testing, so the programmer got DM and DC together to try them out with some talented ABC interviewers, Leigh Sales and Michael Brissenden, who took it in turns to see if they could trip them up.

Leigh Sales began by trying to catch DC off guard:

LEIGH SALES: Against the backdrop of the campaign, Australia has just posted the slowest wage growth in decades. Between that, low inflation, low productivity and a stubborn deficit, do politicians need to level with Australians and say to them that they're unlikely to continue enjoying rising standards of living?

DC: Well our economy's an economy in transition. We're dealing with global economic headwinds, we're dealing with lower global economic growth and we're dealing with much lower global prices for our key commodity exports and that is of course why it is so important that we continue to implement our plan for jobs and growth. And, I mean, if you look at the results that we've achieved so far, the economy is growing at three per cent - higher than any of the G7 economies, double the rate of Canada, employment growth is strong, the unemployment rate at 5.7 per cent is not as low as we would want it to be, but it is much lower than what had been anticipated when we came into government in 2013. So we've got to keep heading in the same direction, we've got to keep implementing our plan for jobs and growth, including a more competitive enterprise tax rate.

Head spinning, she turned to DM:

LEIGH SALES: You talk a lot about your ‘plan’; the electorate still doesn’t understand what it is:

DM: The budget is an economic plan to ensure that we provide for growth and jobs to drive this transition that is occurring in our economy.

Australians know that our economy is transitioning and they know there are great risks and threats to it. This budget is the economic plan, which will support that growth that supports those jobs by backing in the investment that is needed to make it happen.

Michael Brissenden jumped in to chance his arm with DC:










MICHAEL BRISSENDEN: Alright. On the broader economic policy issues, what exactly did Treasurer Scott Morrison mean when he said the government may have to ‘recalibrate’ its policy mix after the election?

DC: Well you know, obviously we have a very clear national economic plan for jobs and growth but as you know, we have always - as we have done in the past and as we continue to do moving forward, we'll always make judgements based on the circumstances as they evolve to ensure Australia's…

MICHAEL BRISSENDEN: So everything could be back on the table?

DC: No, that is not right. I don’t accept that characterization. I think that everybody knows that we are focused on implementing our plan for innovation to support start up businesses everywhere.

Everybody knows we're focused on implementing our defence industry plan to support local high-end manufacturing.

Everybody knows we're focused on rolling out our export trade deals, which help our exporting businesses.

And everybody knows that we're focused on making our tax system more growth friendly, delivering business tax cuts paid for by crack downs on tax avoidance and by better targeting relevant tax concessions.

Now, obviously as economic circumstances evolve and as we continue to face economic headwinds, we pursue opportunities and we will continue to do everything we can to ensure that Australia is as strong as possible.

An economic foundation to take advantage of the opportunities but also to be resilient in the face of any challenges. We must live within our means!

MICHAEL BRISSENDEN: And the political realities may mug you as well after the election, you may be forced to change things because you can't get stuff through the Senate for instance.

Nick Xenophon tells us that he has some pretty serious reservations about the company tax cut, extending beyond businesses earning over the turnover of 10 million.

So you may have to compromise on some things including some of the centrepiece of your election budget strategy.

DC: Well our message to the Australian people is that if you want us to implement our plan for jobs and growth, if you want us to implement a plan that would help secure our successful transition from resource investment driven growth to broader drivers of growth, then support our candidates, yes in the House of Representatives but also give us your vote in the Senate because it is in our judgement in the national interest for us to have the capacity to get our plan for jobs and growth through the Senate as well as through the House of Representatives on the other side of the election.

MICHAEL BRISSENDEN: And if that doesn't happen, you may have to compromise, might you?

DC: Well our message to the Australian people is that if you want us to implement our plan for jobs and growth, if you want us to implement a plan that would help secure our successful transition from resource investment driven growth to broader drivers of growth, then support our candidates.

MICHAEL BRISSENDEN (exasperated): Okay. DC, we'll leave it there!

He decided to try his hand with DM and tackle him about priorities (Sales sat quietly head in hands):

MICHAEL BRISSENDEN: You talk about a $50 billion tax cut for businesses, but you say you can't afford $37 billion for schools.

I mean it is about where you're putting your priorities.

DM: And you know what our priority is – growth, economic growth – because if you don't have economic growth, you don't have jobs.

If you don't have economic growth, you don't have the growth in revenue that pays for schools and for hospitals and for all of these things. And we must live within our means.

Now what Labor is doing in this election is running around committing money that it doesn't have.

MICHAEL BRISSENDEN: And we still have a spending problem under you, your own budget papers show that tax...

DM: I don’t accept that characterization. We're getting it down to 25.2 and what we've learnt this week is Labor's big defence yesterday was to say oh well, it's not as much as $67 billion. It's only $37 billion.

Now what it also admitted to yesterday is that all of the revenue they say they save by, or gain again by not going ahead with our small and medium sized tax cuts for businesses, all of that is already spent because they have to make up 18 billion in measures that they're already blocking.

So when Bill Shorten says 'I'm paying for this on schools or hospitals because we're not going ahead with the company tax cuts', well that's a lie.

It's not true because he's already spent them. He's spent every single cent of that going ahead with those company tax cuts, not on paying for schools or hospitals but for paying for the things he already opposes. We intend to live within our means!

DC chipped in:

DC: Well our message to the Australian people is that if you want us to implement our plan for jobs and growth, if you want us to implement a plan that would help secure our successful transition from resource investment driven growth to broader drivers of growth, then support our candidates.

Irritated by DC’s repetition, Brissenden jumped in to see if he could give a more plausible response to his question to DM. Could he trip him up?

MICHAEL BRISSENDEN: How come you can afford a $50 billion tax cut for businesses, but you can't afford $37 billion for schools?

DC: Well, I don’t accept your characterization. You know what our priority is – growth, economic growth - because if you don't have economic growth, you don't have jobs.

If you don't have economic growth, you don't have the growth in revenue that pays for schools and for hospitals and for all of these things. And we have to live within our means!

DM could not resist having his say:

DM: The budget is an economic plan to ensure that we provide for growth and jobs to drive the transition that is occurring in our economy.

Australians know that and they know there are great risks and threats to it. This budget is the economic plan, which will support that growth that supports those jobs by backing in the investment that is needed to make it happen.

It’s all about jobs and growth, jobs and growth, jobs and growth, jobs and growth, jobs and growth…

Brissenden’s eyes glazed over. He turned to Sales. Leigh, how on earth do you turn these things off?

Don’t know Michael. I guess they will stop when their batteries run out. But I suspect someone recharges them every night. We may never escape them!

As Sales and Brissenden retreat defeated, DM and DC chatter on:



Jobs and Growth, Jobs and Growth, Jobs and Growth; Our economy is transitioning, Our economy is transitioning, Our economy is transitioning; The budget is the economic plan, The budget is the economic plan, The budget is the economic plan; If you don't have economic growth, you don't have jobs, If you don't have economic growth, you don't have jobs, If you don't have economic growth, you don't have jobs. It’s all about Jobs and Growth, Jobs and Growth, Jobs and Growth, Jobs and Growth…….

As Sales and Brissenden disappear, DC and DM smile knowingly at each other: Together they babble:
We won. We won. We won! Again!!!

What do you think?
What do feel about our Daleks?

Do they irritate you?

Do you listen to them any more, except for amusement?

Let us know in comments below.

Turnbull is selling us a pup



You all know what that idiomatic expression means – being tricked into buying something that is worthless. It arose from the old swindle of selling a bag that purportedly contained a piglet, but instead there was a puppy inside.

PM Turnbull wants you to believe that his bag contains a piglet, but all you will find is a pup. The piglet is called ‘Jobs and Growth’. Every day, many times every day, he is out there on the streets crying ‘Jobs and Growth’, ‘Jobs and Growth’, ‘Jobs and Growth’, like a door-to-door snake oil salesman.

The piglet that Turnbull says he has in his bag sounds attractive. Who would deny the benefit of more jobs? And only a nihilist would eschew the notion of growing the economy.

Trouble is that he won’t let you peep inside to check out the piglet. And he won’t tell you where he got it. He doesn’t want you to know its bloodline, whether or not it’s diseased, and whether it's able to do what piglets do best.

He wants you to buy his ‘Jobs and Growth’ piglet sight unseen; he does not want you to question its soundness.

How does he intend to feed his Jobs and Growth piglet? He says he will feed it with tax cuts for businesses, not just small businesses that we are told are the life blood of our economy and the leading employer of our workers, but also large businesses right up to multinational corporations, owned mainly by overseas investors.

How does he know that feeding the Jobs and Growth piglet with tax breaks will make it develop into a fat and succulent pig? Well, he has a theory.

It goes like this: cut taxes to businesses and they will use the extra money in their pockets to expand their business, produce more, and employ more. That’s it! Turnbull didn’t invent it, nor did his daleks Treasurer Morrison or Finance Minister Cormann. It’s been around a long while. It goes by the name ‘Supply-side economics’. If you want to learn more about its origins and modus operandi read this detailed account in Wikipedia, which begins:
“Supply-side economics is a macroeconomic theory which argues that economic growth can be most effectively created by investing in capital, and by lowering barriers on the production of goods and services.

“According to supply-side economics, consumers will then benefit from a greater supply of goods and services at lower prices; furthermore, the investment and expansion of businesses will increase the demand for employees and therefore create jobs. Typical policy recommendations of supply-side economists are lower marginal tax rates and less government regulation.”
You’ve heard about lower marginal tax rates and less government regulation before, and how the benefits of these measures will trickle down to those at the bottom of the pile. We’ve written about: ‘Trickle down economics’ on The Political Sword’. Its original name, coined by economist John Kenneth Galbraith, was: ‘Horse and sparrow economics’ – “If you feed enough oats to the horse, some will pass through to the road for the sparrows.” Read The trickle down effect by 2353NM, How the economic rationalists tried to steal our hearts and minds by Ken Wolff, and Trickle down economics breeds inequality by Ad astra.

Turnbull’s propositions might sound plausible to the casual observer, but does supply-side economics do what its proponents insist it does? Does it work? Is Turnbull’s Jobs and Growth piglet capable of developing into a large edible pig?

This question is not one that conservatives intend to address, although there is plenty of evidence that might provide an answer. They have an extraordinary capacity to ignore evidence. In an article in Alternet, Noam Chomsky quotes political scientist Norman Ornstein’s description of the fervently conservative US Republican Party: “…a radical insurgency that doesn’t care about fact, doesn’t care about argument, doesn’t want to participate in politics, and is simply off the spectrum.” Here we have the Liberal Party – same mind-set.

So does supply-side economics work? We have written often about the fallacy of trickle down economics, (see above) but there is much more. Sometimes you hear this economic theory described as ‘Reaganomics’ or ‘Thatcher economics’.

Let’s start with a blistering critique of Reaganomics, or ‘Riganomics’ as she prefers to call it, by Rachel Maddow, an American television host, political commentator and author who hosts a nightly television show, The Rachel Maddow Show, on MSNBC. The critique is titled: How Reaganomics Destroyed The Middle Class...And Maybe America. It’s worth watching the whole 8 minutes 26 seconds of this YouTube clip:



If that hasn’t convinced you of the fallacy of supply-side or trickle down economics, read this appraisal in Wikipedia. Part of the theory, which some describe as ‘voodoo economics’, posits that rather than federal revenue falling when tax cuts are made, it would rise, as portrayed by the mythical Laffer curve, debunked long ago. The theory is refuted here:
”Economist Gregory Mankiw used the term "fad economics" to describe the notion of tax rate cuts increasing revenue in the third edition of his Principles of Macroeconomics textbook in a section entitled "Charlatans and Cranks":

“An example of fad economics occurred in 1980, when a small group of economists advised Presidential candidate, Ronald Reagan, that an across-the-board cut in income tax rates would raise tax revenue. They argued that if people could keep a higher fraction of their income, people would work harder to earn more income. Even though tax rates would be lower, income would rise by so much, they claimed, that tax revenues would rise.

“Almost all professional economists, including most of those who supported Reagan's proposal to cut taxes, viewed this outcome as far too optimistic. Lower tax rates might encourage people to work harder and this extra effort would offset the direct effects of lower tax rates to some extent, but there was no credible evidence that work effort would rise by enough to cause tax revenues to rise in the face of lower tax rates…

“People on fad diets put their health at risk but rarely achieve the permanent weight loss they desire. Similarly, when politicians rely on the advice of charlatans and cranks, they rarely get the desirable results they anticipate. After Reagan's election, Congress passed the cut in tax rates that Reagan advocated, but the tax cut did not cause tax revenues to rise.”
Writing in Business Insider Australia, about the US economy in an article titled BOMBSHELL: New Study Destroys Theory That Tax Cuts Spur Growth, Henry Blodget says:
“One economic theory has been repeated so often for so long in this country that it has become an accepted fact: Tax cuts spur growth. Most Americans have gotten so used to hearing this theory that they don’t even question it anymore.

“One of our two Presidential candidates is so convinced of the theory that he has built his entire economic plan around it, despite the huge negative impact additional tax cuts would likely have on our debt and deficit.

“But is the theory true? Do tax cuts really spur growth?

“The answer appears to be “No.”

“According to a new study by the Congressional Research Service (non-partisan), there’s no evidence that tax cuts spur growth.

“In fact, although correlation is not causation, when you compare economic growth in periods with declining tax rates versus periods with high tax rates, there seems to be evidence that tax cuts might hurt growth…

“One thing that tax cuts do unequivocally – at least tax cuts for the highest earners – is increase economic inequality. Given that economic inequality is one of the biggest problems we face in this country right now, this conclusion is very important…

“…this topic has become highly politicized, so it’s impossible to discuss it without people howling that you’re just rooting for a particular political team. Second, no one likes paying taxes. Third, everyone would like a tax cut, including me.

“So I think we can all agree that everyone would prefer that tax cuts actually did spur economic growth.

“Alas…”
Blodget goes on to prove his point with a number of charts.

He asks: “So, have these declining tax rates for the rich – the ‘job creators’ who are being given a bigger incentive to invest by the reduced tax rates led to faster economic growth?

“Nope.”


Later he says: “Although tax cuts do not appear to spur economic growth, they DO appear to lead to greater economic inequality. Inequality in the United States recently hit a level that has not been seen since the 1920s: The country’s top earners are taking home more of the national income than at any time in 70 years.”

Referring to his charts, he says:
“And now let’s look at the correlation between this rise in inequality and tax rates – the lower the top marginal rates go, the bigger the share of national income that goes to the top 0.1% of wage earners. And it’s the same for capital gains rates.

“Meanwhile, the share of national income that goes to “labour”– a.k.a., most Americans – goes up as the top tax rates increase.

“Why is the rise in inequality so troubling? Well, beyond the issues of fairness and stability, increasing inequality is hurting the economy. Unlike middle class and upper middle class folks the country’s highest earners don’t spend all the money they earn. So this money doesn’t get circulated back into the economy, where it can become revenue for other companies and salaries for other workers. (If there were a dearth of investment capital, the money might get invested, but we’ve got plenty of investment capital right now. Our problem is a lack of demand).

“So, what’s the bottom line?

“Well, the bottom line appears to be that low taxes do not spur economic growth and DO cause greater economic inequality.

“So, although it sounds like heresy, presidents and Congress-people who actually want to fix the economy might want to consider raising taxes rather than cutting them. Or, at the very least, keeping them the same.”
You can read the whole article here.

Along with tax cuts for businesses, Dalek Morrison keeps repeating that we don’t have a revenue problem, only a spending problem! He and Dalek Cormann are programmed to say this mindlessly and endlessly. The unavoidable consequence is spending cuts, which also go by the name ‘austerity’. Austerity has been tried in many places with little success.

An article in the Australian edition of The Guardian by Larry Elliott, Austerity policies do more harm than good, IMF study concludes, subtitled: Economists give strong critique of neoliberal doctrine ushered in by Ronald Reagan and Margaret Thatcher in the 1980s begins: “A strong warning that austerity policies can do more harm than good has been delivered by economists from the International Monetary Fund, in a critique of the neoliberal doctrine that has dominated economics for the past three decades.”

In response to the UK Chancellor of the Exchequer George Osborne’s wish to introduce austerity measures “…to give the government more flexibility in the event of a future crisis”, IMF economists:
“…rejected the notion that austerity could be good for growth by boosting the confidence of the private sector to invest. They said that in practice, ‘episodes of fiscal consolidation have been followed, on average, by drops rather than by expansions in output. On average, a consolidation of 1% of GDP increases the long-term unemployment rate by 0.6 percentage points.’

“The IMF economists summarised what a growing consensus among economists across the globe now think, that Osborne-style austerity economics increases inequality and instability, and undermines growth.”
They concluded:
“…that the increase in inequality threatened to be self-defeating.

“The increase in inequality engendered by financial openness and austerity might itself undercut growth, the very thing that the neoliberal agenda is intent on boosting. There is now strong evidence that inequality can significantly lower both the level and the durability of growth.”
In yet another article in The Guardian: You’re witnessing the death of neoliberalism – from within, Aditya Chakrabortty quotes IMF research: “The results, the IMF researchers concede, have been terrible. Neoliberalism hasn’t delivered economic growth – it has only made a few people a lot better off.”

It seems that if neoliberalism is not yet dead, it is moribund.

How much more evidence do we need to be convinced that Turnbull is selling us a pup? There is no Jobs and Growth piglet in his swag. What’s more, even if there were, it could not grow into the jobs and growth he promises every day. His much-vaunted ‘plan’ has no substance. Ken Wolff goes into this in his TPS Extra piece: What economic plan?

Turnbull’s Jobs and Growth promise will not, indeed cannot be achieved. The food he says he will feed his Jobs and Growth piglet: lower taxes for businesses and spending cuts, will not make it grow. Indeed all the evidence, gathered over fifty years, indicate that his food will not even keep his Jobs and Growth piglet going.

Instead, the opposite will occur – it will starve. There will be no more jobs, and growth will not occur. Inequality will increase.

The rich will get richer and the poor will languish waiting for the promised benefits that will never trickle down.

In fact, the piglet Turnbull is trying to sell us is a pup.

Why do Turnbull, Morrison, Cormann and fellow ministers fly in the face of the facts? Why do they persistently cling to supply-side economics, which has been discredited over and over again? Ornstein’s answer rings true: Neoliberals are 'a radical insurgency that doesn’t care about fact, doesn’t care about argument, doesn’t want to participate in politics, and is simply off the spectrum.’ They adhere to their preferred economic theory because it suits them and their top-end-of-town supporters, replete with top hats.  

How can we argue with such people? We can’t. The only way to destroy their dangerously flawed economics, which threatens not just our economy, but also the social fabric of this egalitarian nation of the ‘fair go’, is via the ballot box.

July 2 is our best chance to tell Turnbull that he is selling us a pup.


What do you think?
Do you feel you are being sold a pup?

If not, what is Turnbull selling us?

Let us know in comments below.