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

economic smoke and mirrors « Previous | |Next »
September 26, 2007

Lets be honest. The Australian Treasurer doesn't run the Australian economy. Global markets do. Governments adapt. For instance, the Treasurer has little control or little say over China's economic growth and its demand for raw materials from a resource-rich Australia. The Treasurer helps to ease a few constraints in supply.


Peter Martin has an op ed on this issue in the Canberra Times . So does Ross Gittins in the Sydney Morning Herald. Have a read and a think.

| Posted by Gary Sauer-Thompson at 8:36 AM | | Comments (5)


Using this logic, it wouldn't matter who was running the country. To suggest that government, liberal or labor doesn't have any influence in running the economy is just laughable. I was under the impression that government creates the environment for exports through the funding and creation of infrastructure such as ports, maintenence of Austrade, etc. I didn't realise that government just sat back waiting for the phone to ring with the next export deal. Regardless of your political bias, give the government of the day some credit.

And if it is the case that government doesn't run the economy, then we don't need politicians so we can get rid of all of them, and we can all govern on an individual basis.

I wonder if that would work!

Gittens argument is a questioning of the view of the importance of the elected government in the management of the economy. It says that it suits governments to reinforce and perpetuate that view, and it doesn't suit oppositions to gainsay it.

He questions this importance in terms of deregulation, the declining importance of the budget and the increassing significance of monetary policy, and the big impact of the state of the world economy.

Peter Martin quotes Macquarie Bank's Rory Robertson:

Canberra's macroeconomic management task today is a shadow of its former self. It's not quite on 'auto pilot', but institutional changes over recent decades mean the Australian economy runs with less direct input from Canberra than ever before." He unkindly observes that the volume of economic commentary emanating from the mouth of the Treasurer about, for example, the GDP, inflation, interest rates, unemployment, commodity prices and so on dwarfs his ability to actually do anything about those things.

"The job of any modern treasurer Liberal or Labor is not so much to manage the economy as to pretend to manage the economy. The biggest part of the job is to provide regular and upbeat economic commentary," Robertson says. "On a typical day, the job is to explain that everything is going very well, and that's all because of us. And, if everything is not going well it's not our fault."
The implication of these kind of arguments is that there is not a significant difference in which political party has control of the Treasury Bench and the economic "levers".

Yes this infers that as the Treasurer is pretending to run the economy so are all the people that work in Treasury pretending to work in Treasury.
What a load of twaddle!

it is more about the relative decline of Treasury vis-a-vis the Reserve Bank over economic policy. The Treasury used to rule. It no longer does. Ken Henry, the Secretary of the Treasury, has acknowedged as much.

Gary et al, Why even John Howard is telling us that its not the Government that is responsible for controlling interest rates. But he does influence other economic indicators, by action or inaction and thus sets the environmental context in which the RBA has to work. Looks as though the Government has messed up somewhere in spite of all those dollars or perhaps because of them.