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

an ideas -free zone? « Previous | |Next »
September 20, 2010

According to Michael Stutchbury, the Economics editor at The Australian, the current power sharing Parliament is akin to a political circus concerned with simply dividing the spoils of power. He adds that so far, there is no sense of post-election policy direction from Gillard, such as how her rejection of Rudd's "big Australia" translates into a growth agenda.

Note the emphasis on the growth agenda--and not on sustainability. We can infer that Stutchbury is not in favour of sustainable development. He is, for instance, all for plain old economic growth as measured by GDP as an as an indicator of wellbeing, and he reckons that the absence of plain old economic growth is a social disaster. Stutchbury comments:

The complaints of the business and policy elite boil down to the sharpest such critique of the political class in a generation. Labor is gutless, Abbott's Coalition is populist, the Greens are anti-growth and the country independents are rural pork-barrellers. In short, the political system is failing to deliver the policies required to extend Australia's remarkable prosperity.

Who are the business and policy elite that Stutchbury refers to? What are the policies that will deliver prosperity? Do these policies move beyond growth as measured by GDP?

Stutchbury's policy elite are mainly those who are critical of the Gillard Government for a variety of differing reasons reckon the China boom won't repeat the prosperity gains of the past decade and that Australia is not making the most of our China boom. However, the impression gained is that what matters for Stutchbury is not the content of the criticism per se, but the criticism itself. It's another part of The Australian's kick the ALP meme.

If we dig beneath this meme, then we find the criticism from the Business Council of Australia president Graham Bradley. Bradley says that Australia faces losing its competitive benefit of cheap coal and gas energy, that Labor has provided no blueprint for Australia's future energy supply, and that the "excuse" of minority government should be rejected.

It is true that the solar energy industry has virtually given up on the federal Labor government to provide a mechanism for the roll-out of utility-scale solar installations across the country. What then is Australia's energy future? For Bradley and Stutchbury it is nuclear power, which could efficiently supply one-quarter of Australian electricity by 2050. And the subsides that are required to ensure that nuclear power is economically competitive? They are not mentioned. There is no mention of a cost benefit analysis either, even though this is demanded of the national broadband network.

Senator Scott Ludlam in Old-tech nuclear power is not the answer in The Australian says that:

In no deregulated energy market, anywhere in the world, is the private sector putting up its own money to build nuclear power stations. The industry remains on subsidised life support everywhere and is making headway only in a tiny handful of countries with state ownership of generators and command and control energy networks. The net effect, as researcher Mycle Schneider has graphed in stark terms, is that the nuclear industry flatlined in the 80s, began to decline in 2002 and is headed for steeper decline, or in the best case stagnation, for the foreseeable future.

He adds that the reasons are a complex mix of ageing reactors, formidable project costs, the unwillingness of insurance companies to cover the astronomical liabilities of reactor accidents and the 65-year unanswered question of what to do with radioactive spent fuel for the next quarter of a million years.

| Posted by Gary Sauer-Thompson at 11:24 AM | | Comments (3)


In Plain old economic growth is good for society Michael Stutchbury says:

GDP was never designed to provide a measure of national progress by itself. Yet, when properly used, it still provides the best summary of material progress which, in turn, provides more resources to devote to social progress.

The main thrust of his argument is that Australia needs to reverse our productivity slump through a new round of market-based economic reform.

The shift to sustainability and quality of life issues--eg., the Measurement of Economic Performance and Social Progress report commissioned by French President Nicolas Sarkozy by Joseph Stiglitz, Amartya Sen and Jean-Paul Fitoussi is largely:

an exercise in defending the French model of big government and committed leisure against work-hard American capitalism. As both the Europeans and the Americans are finding now, the absence of plain old economic growth is a social disaster.

The issue is that the small underlying productivity growth limits our GDP potential.

In Mismeasuring Our Lives Why GDP Doesn’t Add Up Joseph E. Stiglitz, Amartya Sen, and Jean-Paul Fitoussi explored whether Gross Dome- stic Product (GDP), which is the most widely used measure of economic activity,is a re- liable indicator of economic and social progress.

They argued that there were limits of GDP as a measurement of the well-being of societies, Consider, for example, how GDP overlooks economic inequality (with the result that most people can be worse off even though average income is increasing); and does not factor environmental impacts into economic decisions.

In place of GDP, Mismeasuring Our Lives introduces a new array of concepts, from sustainable measures of economic welfare, to measures of savings and wealth, to a “green GDP.”

This is the work that Stutchbury---and the Australian--are opposed to. Thus Stutchbury dismisses it as an exercise in defending the French model of big government and committed leisure against work-hard American capitalism!

The Australian's view is that the critics of the view that Gross Domestic Product (GDP) is a good indicator of wellbeing have given up on the idea of economic growth. They are ‘growth sceptics' whose pessimistic conclusions drawn about economic progress---negative externalities (pollution). Hence their growth-sceptic despair that only sees only sees human beings as plundering the planet.

The real problem with GDP, for those who adopt Stutchbury old fashioned growth is good position is that this measure seriously underestimates the benefits of economic growth due to the huge benefits of science and technology (eg medicine). These benefits indicate that humans have the capacity for ingenuity or innovation and so have the ability to deal with natural challenges in other ways, such as through technological innovation, adaptation or geo-engineering solutions.

This ingenunity is what the growth sceptics deny. They are about rationing.