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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

strange economic thinking « Previous | |Next »
March 14, 2005

The Howard Government has finally acknowledged that economic growth has slowed sharply since December. It couldn't do otherwise, given the public figures. However, it has also has acknowledged that the threats to the national economy are greater than anticipated: including thoe threat of destablisation caused by the adjustment of the US dollar, due to the US's budget and current account deficits. About time.

It made these acknowledgements in its economic assessment contained in its submission to the national safety net wage review. That acknowledgment is good to know, given this kind of future scenario.


Despite this acknowledgement of economic reality, the old "retro" economic thinking of the 1980s continues to be voiced from the Treasury benches. An example can be found in this report by John Garnaut in the Sydney Morning Herald. He reports Senator Minchin, the Finance Minister, as saying:

The Government should sell its Telstra shares to buy a portfolio of other income-earning investments....Government money should not be spent on infrastructure, despite several reports recently arguing that inadequate railways, ports, utilities and other facilities have hampered exports and are acting as a handbrake on the economy.

Instead of using the proceeds of Telstra to invest in infrastructure Senator Minchin proposed that much of the Government's estimated $30-35 billion from selling its half share in Telstra should be poured into its Future Fund---an investment vehicle to be controlled by private sector fund managers.

I find that proposal odd since it disconnects government from governing development, which is what national governments normally do.

Some questions: 'Who should invest in the nation-building infrastructure then?' Private industry? 'Did not the government (the states) do this kind of nation building in the past?' 'Why is this wrong for the commonwealth to do it now?' 'Does not building infrastructure add to the productive capacity of the economy and improve the long-run growth potential of the country?' 'Why should this be left to the market?'

Now, as we know, what is being rejected by Senator Minchin is a progressive (or social)liberalism that is committed to building the Australian nation and its resources; a liberalism with its conception of politics as a noble profession and a means for collective endeavour to further the common good. What Minchin is rejecting is the Menzies heritage of the Liberal Party.

However, Minchin's neo-liberal approach also represents a triumph of ideology over science. He does not regard his economics as a changing systematic theory in the pursuit of knowledge about how the economy works. His economics is assumed to be the right viewpoint from which to look at economic phenomena.

| Posted by Gary Sauer-Thompson at 12:02 PM | | Comments (2)


How many of the Liberal parliamentarians, I wonder, feel guilty because the current incarnation of their party runs counter to much that was good and true about traditional liberalism?

The Liberal Party understands itself to be a broad church that welcomes and celebrates a diversity of views ranging from social and political conservatism to libertarianism.

From the outside the intolerance between social and market liberalism borders on civil warfare.