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November 29, 2008
There is such a fetish about budget deficits in Canberra. It is seen as the hall mark of economic mismanagement and irresponsibility. The politics is that Labor equals budget deficit because they cannot run the economy. And as this politics goes, a deficit is not seen as a way to prevent he economy from sliding into recession.
It is hard to build a case against the way the Rudd government has responded to the economic downturn on budget deficits are bad. What is the next step? That the Rudd Government is going a spending spree? That doesn't cut much ice when the general economic consensus is that there is a need to boost demand through government spending on infrastructure and aggregate demand.
What sits underneath this deficit is bad view is the neo-classical view that economic systems tend naturally towards equilbrium when markets cleared and all resources are fully allocated; and that regulation is distrusted and needs to be minimised.
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Was going to comment on Tim Colebatche's article in Age until saw the cartoon.
The classical liberal view of course represents a different philosophical base located between the poles of Hobbes and Locke; very post-lapsarian swiging to Panglossian.
Is eagerly embraced by people like those who write for the Murdoch press and Turnbull who are insulated from the mistakes and greed that lead to market failure and the greif it causes for so many. Their personal selling out of society, which they smugly attribute to be their own pragmatism and cleverness, allows them to blithely continue; "business as usual", while the majority cop it sweet through repossessions and unemployment locally and famine throughout the Third World.
Such is "civilisation".