catallaxy files

catallaxy in technical exile

Lessons from New Zealand

with 63 comments

Tony Abbott suggested that we should have a look across the Tasman and see what the New Zealanders are up to.

TONY ABBOTT: But at high price. And if you look across the Tasman, New Zealand has done just as well it seems as Australia without going into anything like the same level of debt and deficit that we have.

Okay. The problem is, as Peter Martin points out, is that New Zealand went into recession. Australia didn’t. Of course, that doesn’t mean that we have nothing to learn from the Kiwis and them from us, but it does seem to blunt Abbott’s point somewhat.

The argument now getting traction is that spending heaps of money to avoid a recession is worthwhile at almost any cost. The reason being is that the jobs market is permanently damaged by recession. This is especially so for new entrants. So it seems that if we have two consecutive quarters of -0.1% growth that new job market entrants have permanently depressed job prospects, but if we have only one quarter of -0.2% followed by a 0% quarter then everything is okay. I don’t think so, but that seems to be the logic.

So I had a look at the relative unemployment rates in Australia and New Zealand.

I don’t want to trivialise the trauma of unemployment but there isn’t much in that – especially as New Zealand had 5 quarters of negative growth and Australia had just one quarter of negative growth.

I think Abbott needs to attack the government on their handling of the economy. But I’m not sure that throw-away lines are the way to go.

This did give me the oppourtunity to revisit a graph I first presented to the Senate in October. At the time I didn’t have data for New Zealand, but I was able to get a GDP growth figure and include New Zealand in the graph. Australia is the red square, New Zealand is the green dot.

Update: I couldn’t find the argument earlier about why ‘avoid a recession’ and unemployment, but now have found it. It is from a speech David Gruen made last month.

But in contrast to this calculation, in my view, cost-benefit analyses of policies aimed at avoiding recessions need to take into account that recessions are disequilibria phenomena in which markets don’t clear for extended periods of time. It is worth providing a brief summary of some of the benefits of avoiding a recession that would not be relevant if a recession was instead simply an equilibrium market outcome.

The first, and most obvious, benefit is that involuntary unemployment is lower than it would otherwise be. Among other things, lower involuntary unemployment implies less long-term unemployment and hence less skill atrophy and less general disaffection with society on the part of the long-term unemployed. The Treasury estimates presented in Chart 9 imply that the fiscal packages reduced the peak unemployment rate by 1½ percentage points. I suspect, however, that this is an underestimate, both because it was calculated using conservative fiscal multiplier estimates, and because it takes insufficient account of the favourable feedback loop that I spoke about earlier when discussing the impact of expansionary macroeconomic policy on confidence.

But there are further benefits to avoiding a recession that would need to be taken into account in a realistic cost-benefit analysis of discretionary fiscal stimulus. Recessions break productive links between firms, and between firms and workers, when firms that would otherwise be viable over the long-term are driven into bankruptcy by a recession. In other words, plenty of the destruction that occurs in a recession is not creative destruction.

Finally, recessions do long-lasting damage, particularly to that cohort of people entering the labour market at the time the recession hits. Thus, for example, university graduates entering the labour market in a recession suffer sizeable initial earnings losses, losses that persist for a period estimated at between eight and fifteen years – that is, long after the recession has ended (Oreopoulos et al., 2006, Kahn 2009).

Update II: Conrad reminds me of an Andrew Norton post looking at graduate employment and recessions.
Update III: Nicholas Gruen has a (semi) related post here. (Observant readers will note that both Gruen brothers are being mentioned in the same post. A first for catallaxy, I think).

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Written by Sinclair Davidson

January 8, 2010 at 11:29 am

Posted in Uncategorized

63 Responses

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  1. Didn’t you say the other day, Sinclair, that we are still in a real recession, when you take GDP per capita into account rather than GDP?

    Rococo Liberal

    January 8, 2010 at 12:43 pm

  2. Not me. That’s John Humphreys’ argument.

    Sinclair Davidson

    January 8, 2010 at 12:49 pm

  3. So the net result is that spending programs – “go early, go big and go household”- has little effect on employment numbers while saddling the nation with large debt and reduces future GDP potential.

    In other words monetary policy really does the work.

    jc

    January 8, 2010 at 12:55 pm

  4. Question from a non-economist: Would it be fair to say that stimulus money avoids a recession simply by distorting the books, and/or by postponing losses?
    .
    I mean this in the sense of, if you own a corner store and sales are going down, you can falsely show increased sales by borrowing money and buying your own stock; or getting your brother to buy stock, then buying it back off him.
    .
    In the same way, a country with a shrinking economy can falsely show expansion by borrowing and spending lots of money. This will push the indicators into positive territory even if the borrow/spend has no “real life” effect.
    .
    A second advantage of this tactic is that if you do it right, you can concentrate all your losses into a single day, by “buying out” other loss-making days. If your wife is counting the number of days you make a loss, you can keep her happy by making a profit every day but one.
    .
    Similarly, defining a recession as 3 quarters of contraction encourages governments to play tricks to avoid that from happening.
    .
    As I said, I’m not an economist so tell me if this is way off base.

    daddy dave

    January 8, 2010 at 1:15 pm

  5. “Would it be fair to say that stimulus money avoids a recession simply by distorting the books, and/or by postponing losses?”

    No, it is worse. It does that but then think about what this does in terms of viability or what people actually want and need to produce.

    There is no rationality to all of this. Temporary building projects are funded by taking available funds from viable sectors at a high cost into those with questionable returns.

    Education may be great in the long run, but improving economic performance by improving education is not done by building generous and sometimes unnecessary school amenities.

    Semi Regular Libertarian

    January 8, 2010 at 1:26 pm

  6. It would be best to compare the two nations after putting figures into per capital terms and allowing for any population changes. Obviously the stimulus ought to be in per capital terms also.

    TerjeP (say Tay-a)

    January 8, 2010 at 1:41 pm

  7. err no going early… actually has left us with debt a little less than NZ.
    No Stimulus equals bigger public debt.

    The NZ unemployment rate is the result of ACTUAL de-regulation.Now that is something the Liberals here could advocate.

    NZ has a lower NAIRU than us.

    DD there are various definitions of what a recession is.

    We suffered a minor one because the stimulus headed off the contraction just as it hit us.

    Butterfield, Bloomfield & Bishop

    January 8, 2010 at 1:49 pm

  8. So if I’m reading this right we had 4.6% of GDP stimulus and the kiwi’s had around 4.3% and for that extra 0.3% we got about 1.5% less unemployement increase and around 2% extra GDP.

    Would seem to be a rather silly line to attack the government with.

    Steve Edney

    January 8, 2010 at 1:59 pm

  9. “The reason being is that the jobs market is permanently damaged by recession. This is especially so for new entrants.”
    .
    And the empirical evidence for this is?

    conrad

    January 8, 2010 at 2:02 pm

  10. Conrad see here. I have seen this written up recently in the media or on a blog but can’t recall where.

    See also the article by Sue Richardson in the AFR yesterday (7 January 2010).

    Sinclair Davidson

    January 8, 2010 at 2:19 pm

  11. DD there are various definitions of what a recession is.

    And I thought to myself, where have I seen the same sentence and then i remembered.

    Homer says:

    There are various definitions of the term skanky ho. It is only in the Rap definition where it is defined as a prostitute.

    jc

    January 8, 2010 at 2:28 pm

  12. yeah Forrest and guess what you have NEVER been able to disprove it and no-one else did at the time either which was around 2002 if my memory serves me.
    Funny about that

    Butterfield, Bloomfield & Bishop

    January 8, 2010 at 2:43 pm

  13. Steve – yes. I made the point that several economies had stimulus packages about the same size as we did and they all had negative growth. So the stimulus could not explain why we avoided negative growth.

    Sinclair Davidson

    January 8, 2010 at 2:46 pm

  14. one of the reasons is that our stimulus program occurred before or just as we were hit with the GFC not AFTER it hit.

    Butterfield, Bloomfield & Bishop

    January 8, 2010 at 2:49 pm

  15. stimulus looks a lot like quack medicine. just apply the cure to a bunch of people then invent reasons ex-post as to why some people got better and others didn’t.

    ben

    January 8, 2010 at 2:53 pm

  16. We weren’t “hit” by the “GFC.” In fact, it was forecast that we wouldn’t be – thanks to the soundness of the financial system inherited by Labor. As Kevin Rudd insisted in late 2008:

    “It’s quite plain that there is a strong view that Australia’s banks are in a strong working order and their balance sheets are strong as well,” he said.

    “That view was reinforced to me in discussions I just had with representatives of the finance community here in New York.”

    Mr Rudd has also seized on the International Monetary Fund’s (IMF) positive assessment of the Australian economy, saying it underscores the need to maintain a strong budget surplus.

    C.L.

    January 8, 2010 at 3:30 pm

  17. hmm let us examine what happened in 2009.OECD forecasts -0.4% GDP growth, IMF forecasts -1.4% growth in April and then -0.5% in June. Consensus has it falling 0.7% in May the RBA forecast it falling 1% in May and Treasury 1.1% in May.

    gosh CL wrong AGAIN who would have ever thunked it.

    Yes we were expected to get hit and quite severely Access said it would be the worst contraction we have seen.
    We didn’t because mainly of the stimulus

    Butterfield, Bloomfield & Bishop

    January 8, 2010 at 3:44 pm

  18. April 2008:

    Australia safe from US recession, says IMF.

    Again in September 2008:

    Mr Rudd has also seized on the International Monetary Fund’s (IMF) positive assessment of the Australian economy, saying it underscores the need to maintain a strong budget surplus.

    Again in October 2008:

    The International Monetary Fund (IMF) has delivered a positive forecast for Australia despite the deepening global credit crisis, Prime Minister Kevin Rudd says.

    Overnight, the IMF released its world economic outlook, saying Australia was unlikely to slip into recession.

    Why? February 2009:

    Australia’s economy will keep outperforming international counterparts because its financial system is in better shape, monetary policy is working and it had more momentum prior to the global financial crisis, central bank Assistant Governor Malcolm Edey said.

    So Rudd inherited a cakewalk from Howard and Costello but ginned up an Australian “crisis” so he could be seen to “save” an economy that wasn’t in trouble anyway.

    Cost of stunt: $42 billion.

    C.L.

    January 8, 2010 at 3:58 pm

  19. CL treats everyone as stupid as he.
    the IMF is forecasting growth of over 2% in 2008 but by April 20009 this had turned to MINUS 1.4%.

    WHY?

    Cost of the stunt? No recession. Well worth it

    Hang on what did the IMF or the OECD say about it?

    They approved. Well I never

    Butterfield, Bloomfield & Bishop

    January 8, 2010 at 4:06 pm

  20. We were in no danger of a full-blown recession, as the IMF correctly predicted in mid-2008. Before he came up with the idea for a Keynesian stunt, Rudd was chuffed:

    Mr Rudd has also seized on the International Monetary Fund’s (IMF) positive assessment of the Australian economy, saying it underscores the need to maintain a strong budget surplus.

    LOL.

    C.L.

    January 8, 2010 at 4:11 pm

  21. “Cost of stunt: $42 billion.”

    In another thread the inmates were saying that govt spending is not the economy..

    rog

    January 8, 2010 at 4:41 pm

  22. Govt deficit that is

    rog

    January 8, 2010 at 4:41 pm

  23. “Conrad see here. I have seen this written up recently in the media or on a blog but can’t recall where.”
    .
    I’m surprised at that. I think Andrew Norton dug through the graduate outcomes and census data and didn’t find any thrilling affect a few months back and someone over at Troppo did something very similar (Ken Parish?). I also dug through the underemployment data which you can get from the ABS a few months ago out of interest, to see whether I was born in a cursed time (having finished my degree in 1992!) — if it was true, you would expect blips in certain age groups at certain times, and there didn’t look like any thrilling effects to me. However, the ABS data is only chopped into 10 year age categories (which suggests that the 35-44 yr old category should be especially punished, but they wern’t), so it’s not super. Perhaps the Aus market is different to the US one (at least it would be good to see a similar analyses). If so, or even if the effects are small, I assume it’s not a good argument for a massive stimulus package.

    [Andrew’s post here and Club Troppo here. Sinc]

    conrad

    January 8, 2010 at 4:43 pm

  24. “In another thread the inmates were saying that govt spending is not the economy..”

    What are you inferring?

    1. The deficit IS the economy.

    2. Deficit spending is generally useful

    3. Other?

    Semi Regular Libertarian

    January 8, 2010 at 4:51 pm

  25. Conrad, I agree that it seems a very poor argument for the stimulus, but that is the argument being made (see the update above). In the original Kahn paper she tracked cohorts over time – now that can’t be done using the ABS data so the hypothesis hasn’t been tested in Australia (to the best of my knowledge). Where I have seen it being discussed people seem to belive that the US expereince translates into Australia (there are similar results for Japan).

    More here.

    “People assume once the recession is over, people go back to work. They don’t quite get the long-lasting impact,” says economist John Irons of the Economic Policy Institute in Washington, D.C.

    What Irons calls “economic scarring” will long serve as a reminder of the 2007-09 recession.

    Millions of workers who’ve lost their hold on the labor market are seeing their incomes reset to a permanently lower level. Young people who entered the workforce this year can expect to earn substantially less during their careers than those who start work during booms.

    Sinclair Davidson

    January 8, 2010 at 4:51 pm

  26. CL cannot reconcile the different forecasts for Asutralia between 2008 and 2009 by the IMF. Gee it only differs by around 4%.

    It was called a GFC.

    Butterfield, Bloomfield & Bishop

    January 8, 2010 at 5:30 pm

  27. The IMF forecast that there would be no major crisis for Australia.

    They were right.

    C.L.

    January 8, 2010 at 5:58 pm

  28. No they were wrong
    They forecast the Australian economy to fall by 1.4%.

    It didn’t thanks to the stimulus.

    Butterfield, Bloomfield & Bishop

    January 8, 2010 at 7:38 pm

  29. I actually thought they predicted 2% GDP growth for 2008 and 0% for 2009.

    Do you have a link Butters?

    Semi Regular Libertarian

    January 8, 2010 at 8:21 pm

  30. CL why stop at mid-2008 in getting guidance from IMF forecasts, why not go back to 2006 or 2007? One thing about forecasts is they change.

    It’s quite extraordinary that the unemployment rate hasn’t gone higher given the huge drop in RGDI, a far better measure of growth for Australia than real GDP. The last time we had a fall in income of this magnitude unemployment went well above 10%.

    I don’t think there is any doubt that a combination of both monetary and fiscal stimulus was successful in mitigating the worst effects of recession on Australian households. Whether it has just set us up for trouble down the track is another question.

    sdfc

    January 8, 2010 at 8:29 pm

  31. April, 2008:

    Australia safe from US recession, says IMF.

    Kevin Rudd replies to the IMF’s correct forecast that Australia was in no substantive danger from the so-called “GFC” (which Homer believes was comparable to the Great Depression).

    Mr Rudd has also seized on the International Monetary Fund’s (IMF) positive assessment of the Australian economy, saying it underscores the need to maintain a strong budget surplus.

    The “stimulus” was a $42 billion TRAP stunt.

    Strangely, Homer defends Paul Keating’s recession – which gave Australia its worst unemployment since the 1930s – because it was a recession “we had to have.”

    C.L.

    January 8, 2010 at 9:01 pm

  32. I guess it might be appropriate to ask what happened to NZ’s RGDI, or what the multiplier was for countries that used stimulus.

    All in all, Australia is an outlier. If think this can be fairly attributed to an economy with less structural imbalances, a good credit market (despite the implosions of smaller mortgage originators) and a flexible exchange rate that suits our circumstances with a lot of room to move with monetary policy – although probably too much and the previous tightening was too late.

    Semi Regular Libertarian

    January 8, 2010 at 9:01 pm

  33. The major lesson we should learn from NZ is that the French are devastating in RWC semi-finals.

    Infidel Tiger

    January 8, 2010 at 9:02 pm

  34. SRL – You can safely say NZD RGDI did not fall anywhere near 4% YOY in JQ or 3% YOY in SQ as it did here.

    Do you honestly believe that mortgage rates at near 40 year lows and heaps of money being tipped into the economy had no effect of growth?

    sdfc

    January 8, 2010 at 9:16 pm

  35. “Do you honestly believe that mortgage rates at near 40 year lows and heaps of money being tipped into the economy had no effect of growth?”

    I assume you’re talking about monetary policy, I don’t know why I gave that impression.

    Semi Regular Libertarian

    January 8, 2010 at 9:21 pm

  36. SRL

    I’m talking about policy. If you want to strip out monetary policy I’ll play that game with you.

    Do you honestly believe the government tipping a heap of money in the economy has had no effect on growth? If so, perhaps you need to explain why not so we can move forward.

    sdfc

    January 8, 2010 at 9:30 pm

  37. Only in a short term, highly nominal, questionably efficacious, probably detrimental way.

    Semi Regular Libertarian

    January 8, 2010 at 9:38 pm

  38. There is no evidence that stimulus has increased inflation so much of that nominal growth must be real. This is afterall a less than fully empoyed eoconomy. As for the spending being largely unproductive I have some sympathy for that position. I would favour a stimulus package driven by infrastructure spending. By infrastructure I don’t mean the half arsed school building program which at my kids primary at least has been largely wasted on duplicate buildings.

    I am no fan of spending for the sake of avoiding recession however it am not sure that government spending has not save us from higher unemployment and its associated problems. Particularly given household debt to income is in the vicinity of 160% of disposable income.

    sdfc

    January 8, 2010 at 9:57 pm

  39. SRL

    Just to warn you about SFDC. He thinks everyone else is ideologue except him.

    jc

    January 8, 2010 at 9:58 pm

  40. “it am not sure” should be I’m not sure.

    sdfc

    January 8, 2010 at 9:59 pm

  41. No Jc I said we all are tainted by ideology. You denied it by saying something like “economics is not about ideology”.

    sdfc

    January 8, 2010 at 10:02 pm

  42. Here you go again SDFC. You say you support infrastructure spending but only high quality sort. The point made very ably by Henry Ergas is that Infrastructure spending doesn’t need to be reliant on the business cycle for it to become suddenly necessary as it is anytime.

    This doesn’t seem to filter through to you, does it.

    An earlier post by Sinc showed that very little of the give away was actually spent.

    So what we’re left with that you’re in strong support of is a dunny program and a big giveaway that was spent yet you’re still arguing its efficacy.

    As I keep telling you, the great weight of the world’s recovery occurred as a result of a huge monetary stimulus, not the spending which in say the US case and ours only about 30% has been spent.

    monetary policy is what did it and what has changed things in the past in addition of course to permanent tax cuts.

    This though doesn’t seem to get through, does it?

    jc

    January 8, 2010 at 10:08 pm

  43. Economics shouldn’t be about ideology. That’s correct. You also accused me of being ideological totally ignoring your own.

    Henry Ergas has explained many times that infrastructure spend should require an properly done cost/benefit report.

    You’re basically supporting a bunch of bozos that are prepared to spend 10% of GDP without the slightest whiff of C/A’s in the belief or rather the cult belief that it will somehow stimulate the economy.

    But of course you’re not ideological, everyone else is.

    jc

    January 8, 2010 at 10:14 pm

  44. There is no evidence that stimulus has increased inflation so much of that nominal growth must be real. This is afterall a less than fully empoyed eoconomy.

    Oh John Humphreys clearly showed recently that real GDP on a per capita basis has been flat for the last 6 or so quarters….. flat to slightly negative.

    In other words the stimulus has had dick all effect on the economy.

    jc

    January 8, 2010 at 10:17 pm

  45. “Particularly given household debt to income is in the vicinity of 160% of disposable income.”

    It increased recently. Maybe to deal with falling RGDI?

    Pure extrapolation, but a sign of a good credit market?

    “There is no evidence that stimulus has increased inflation so much of that nominal growth must be real. This is afterall a less than fully empoyed eoconomy. ”

    I would agree there is no evidence so far, but markets are forward looking. Also, I think the monetary response was too deep – inflation increased during the downturn.

    However, your assessment of the stimulus is moderated by your own consideration of full employment. It has been as high as 68% in the recent past but is down around 65%. If the stimulus was really successful, this, along with GDP would have to increase with falling unemployment and stable prices.

    It’s a high standard but fair enough with 4.2% of GDP being sloshed around.

    Semi Regular Libertarian

    January 8, 2010 at 10:35 pm

  46. “In other words the stimulus has had dick all effect on the economy.”

    Didn’t Davidson or Kates have something with trend data about GDP being greater than income, which was greater than production?

    I’d say that is detrimental, not of zero consequence.

    Semi Regular Libertarian

    January 8, 2010 at 11:13 pm

  47. JC – Who said infrastructure spending needs to rely on the business cycle? I would have thought however that government spending on large scale infrastructure would deliver greater benefit at least cost during a downturn. This is self evident.

    If Henry Ergas believes we have exhausted our need for government infrastructure spending when he is as big a dolt as you are. Given I have on more than one occasion said the government school spending program has been largely wasteful, your ongoing assertion that I strongly support the “school dunny program” shows you either don’t read others’ comments or that you have huge comprehension problems.

    By Sinclair’s earlier post I take it you mean his trend analysis of retail sales. I don’t think this proves anything other than current observations can have a large impact on trend figures. The sa figures are far more relevant in real time economic analysis which you would understand if you were the finance guru you say you are. The ABS stopped publishing the trend figures for a reason you know.

    “The weight of the global recovery is due to monetary stimulus” Given US private sector credit outstanding is still shrinking, do you have any evidence for that? You favour permanent tax cuts and military spending but are up in arms about the deficit. What a funny fellow you are.
    You are as usual are long on rhetoric and short on details.

    10% of GDP? Someone is in need of a maths lesson.

    SRL

    I see household debt as a major time bomb for this economy I certainly wouldn’t be cheering it. It’s an outcome of having monetary policy too loose for too long.

    Inflation increased late in teh piece SRL because it is a lagging indicator. The market is currently pricing in fairly benign inflation but I agree this has the potential to change and quite rapidly.

    Sorry to contradict you but Australian labour participation never reached anywhere near 68% hte peak was about 65.3%, though I stand to be corrected on this figure. Are you talking about the US?

    Steven Kates would be aware that differences between the income, expenditure and production measures of GDP is a measurement problem.

    sdfc

    January 9, 2010 at 1:13 pm

  48. SDFC

    I’m not the one with comprehension problems, you are.

    Ergas has always maintained that infrastructure spending doesn’t have to be tied to the business cycle but that you deal with such when they are needed.

    You’re the one who is so ideologically blinkered that you can’t understand what he’s saying.

    You’ve been told now that even on a per cap basis, which ought to be the real measure of how the stimulus program has gone, shows it to be a miserable failure.

    And yes, you have supported the dunny program at times while in other instances poo pooed it (no pun).

    In other words you’re Eddy everywhere on this issue and act more like a cult member believing that the government can come up with an effective spending program on 4.5% of GDP in a couple of weeks.

    Last time I explained to you that this sort of thing fucks up our capital structure you went all emotional on me even though it is clear it has adverse effects.

    jc

    January 9, 2010 at 1:29 pm

  49. The 10% of GDP is the agglomeration of the stimulus and the fiber network rolled into one big debt pie of dog shit.

    As far as i’m concerned it’s all shit spending, so why should anyone differentiate. The total will have little effect and end up providing us with a 10 cents in the dollar return.

    jc

    January 9, 2010 at 1:33 pm

  50. I think the inflation rate rose a long time ago:

    http://www.colonialfirststate.com.au/market-iq-news/economic-insights/inflation-rates.aspx?menutabtype=m

    “Steven Kates would be aware that differences between the income, expenditure and production measures of GDP is a measurement problem.”

    Normally it is. When it goes out of normal variation, in that order, or for a long time, something detrimental is happening.

    I was wrong about the participation rate. To my surprise, I have been wrong about it for a very, very long time.

    Have the number of discouraged workers increased or not? This is pretty important, IMO.

    We’ll have to wait until March for figures on that.

    Semi Regular Libertarian

    January 9, 2010 at 1:37 pm

  51. JC – Who said infrastructure spending needs to rely on the business cycle? I would have thought however that government spending on large scale infrastructure would deliver greater benefit at least cost during a downturn. This is self evident.

    Explain why. Not just in theory but in practical terms. Explain how the government could possibly ensure decent value (by all sorts of meansures) on 35,000 programs that it has greenlighted as a result of this stilmulus package.

    It doesn’t have the manpower (neither at state) to vet this huge spending increases on “infrastructure”. Abid couldn’t answer that question without babbling about how it was necessary to get money into the economy which suggests they are okay with sub par results. Rudd has suggested this on a number of occasions too.
    Perhaps you could do better than they have in defending crap. Go ahead.

    jc

    January 9, 2010 at 1:48 pm

  52. JC

    You just love going around in circles don’t you?

    “Explain why. Not just in theory but in practical terms. Explain how the government could possibly ensure decent value (by all sorts of meansures) on 35,000 programs that it has greenlighted as a result of this stimulus package.”

    I’ve already said on more than one occasion I think much of the spending has been wasteful, that you have not got this by now says you are being either dishonest or have comprehension problems. Saying the stimulus package has supported activity is not the same as giving unqualified support to the composition of the stimulus package. Your ongoing denial of this point suggests you have little to contribute to this discussion.

    “And yes, you have supported the dunny program at times while in other instances poo pooed it (no pun)”.

    Never have. In fact I gave an example of my kid’s primary school to illustrate why I think a large portion has been wasted. Your willingness to constantly state falsehoods about what others have said suggests a massive character flaw.

    Spending on the NBN was government policy at the last election. The problem was created by the previous government selling a monopoly asset into the private sector. Something the free market warriors don’t seem to get.

    How would I have done better? By investing in roads, rail, power generation, public housing, some schools spending etc. Bringing forward investment in times of downturn would I believe be good policy. It’s fairly simple. Are you of the opinion that there are no worthwhile projects that the government could invest in?

    In my opinion Sinclair’s analysis of trend retail sales is inappropriate in this instance, which is why the ABS stopped publishing trend estimates of retail sales. Better to look at the sa figures which suggest the cash hand outs did support household spending.

    SRL

    The high inflation is a legacy of easy monetary policy and inappropriate tax cuts to the houshold sector during the boom.

    Income, expenditure and production measures of GDP are necessarily equal, any other result is a measurement problem.

    Discouraged workers are the hidden unemployed. While the still high level of participation means this is not as great as it has been in the past I agree it is a problem.

    sdfc

    January 9, 2010 at 7:25 pm

  53. I’ve already said on more than one occasion I think much of the spending has been wasteful, that you have not got this by now says you are being either dishonest or have comprehension problems.

    Interesting how you’re playing the leftist reversal trick because i have been accusing you of the very same things from the beginning. You haven’t claimed its been wasteful spending at all. In fact in the most recent post you were suggesting how valuable the spending has been and why it’s more effective during a recession. Remember? Stop the incessant lying as it’s getting really annoying.

    Saying the stimulus package has supported activity is not the same as giving unqualified support to the composition of the stimulus package. Your ongoing denial of this point suggests you have little to contribute to this discussion.

    Do you even know what you’re saying, or don’t you care how silly you sound? If the spending is wasteful, what is the point of borrowing the money and tipping it into something that doesn’t offer a reasonable return. What you’re advocating is heroin shots for all.

    Never have. In fact I gave an example of my kid’s primary school to illustrate why I think a large portion has been wasted. Your willingness to constantly state falsehoods about what others have said suggests a massive character flaw.

    the only character flaw I see is your own. Read the earlier sentence where you suggest “it supports activity” and then slowly read the next sentence. As i said you’re Eddy Everywhere on this thing.

    Spending on the NBN was government policy at the last election. The problem was created by the previous government selling a monopoly asset into the private sector. Something the free market warriors don’t seem to get.

    Doofus, the first sale – T1- was sold by the Keating government. Are you actually saying that we need to spend $43 billion on a network that increasingly looks like it will be redundant by the time it’s complete?Why not just demand structural separation and move out of the way? Why is a monopoly only effective in government hands, as it’s not as though the old Telco had enormous public support. Lastly lets solve the problem by creating another huge one that lies in government hands where the conflict to regulate and price is enormous. You really are a grubby little statist.

    How would I have done better? By investing in roads, rail, power generation, public housing, some schools spending etc. Bringing forward investment in times of downturn would I believe be good policy. It’s fairly simple.

    You mean like these current bozos have done without the give-away. You really are imbued without much imagination are you?

    Are you of the opinion that there are no worthwhile projects that the government could invest in?

    Pretty much. The clear evidence to me is that nearly everything that’s come out of Canberra ends up in a fucked up mess. They fuck up everything they touch. The gang – all political parties- simply can shoot straight.

    In my opinion Sinclair’s analysis of trend retail sales is inappropriate in this instance

    Great attempt to move the goal posts, mergatroid. Let’s not keep the government to account in meeting their stated objectives. Lets cut them lots of slack even when they incur 10’s of billions in debt. You’e not ideological at all, are you? LOL

    jc

    January 9, 2010 at 11:07 pm

  54. T1, T2 and T3 were by John Howard

    rog

    January 9, 2010 at 11:18 pm

  55. The senate committee recommended against the sale of telstra however a gang of 3 recommended for the sale (one of the gang went AWOL and lost his marbles)

    rog

    January 9, 2010 at 11:25 pm

  56. That’s right. I wasn’t here at the time and thought the first tranche of the sale was under Keating. Keating sold part of the CBA and Qantas if I’m not mistaken.

    What’s the meaning of the second comment? You think Telstra should have remained in government hands now, do you?

    As for being a huge nasty monopolist perhaps one of you finance geniuses can explain why its gross margins aren’t much bigger than any other vertically integrated Telcos, why transferring monopoly rights back to the government promotes efficiency and why you think the government can price and regulate more effectively than just regulate alone?

    jc

    January 9, 2010 at 11:42 pm

  57. “What’s the meaning of the second comment? ”

    Crikeys you are thick.

    Senate.committee.privatisation.telstra

    Look it up yourself

    Do your own fact checking

    rog

    January 9, 2010 at 11:48 pm

  58. Rogette;
    I’ll repeat the question a different way. What is the point you’re trying to make with that comment. Are you making any point at all?

    There’s no point, is there because you never have anything to say that’s worthwhile, even before you had the sex change and married Geoffrey.

    jc

    January 9, 2010 at 11:58 pm

  59. “The high inflation is a legacy of easy monetary policy and inappropriate tax cuts to the houshold sector during the boom.”

    Yes there is a legacy, but we had an increase in inflation after the crisis began and the RBA accommodated. They accommodated too much.

    “Income, expenditure and production measures of GDP are necessarily equal, any other result is a measurement problem.”

    No gluts? They cannot ever show up in this manner? Just not possible? If you can show me why that can never happen (I am aware of how the figures are calculated and should add up) I would appreciate it and I’ll take your word for it. Here’s the rub. If the measurement problem is severely out of whack or persistently so, something else might be happening, and in that decreasing order, that’s not good.

    The underemployment and participation rate don’t really show discouraged workers, the ABS has separate survey data for this. The participation rate may be inflated at the moment due to people nearing retirement holding it off due to the need to continue working due to shrunken superannuation accounts via the GFC. I wish I knew where to find the data on this to see if it had any effect.

    Semi Regular Libertarian

    January 10, 2010 at 12:33 am

  60. If you were half the man you say you are JC (cough cough) you would just quietly fess up and admit you made a small error.

    rog

    January 10, 2010 at 8:13 am

  61. Rog:

    Made a small error? You really are a cretin, Rog (no offense to cretins).

    Perhaps you need to start apologizing for the cretinous errors like suggesting nuclear energy is carbon unfriendly.

    You still haven’t apologized for that , have you Edel? …. quickly skulking away onto another subject.

    You would now have to be the least popular girl here, you venomous little bankrupt.

    jc

    January 10, 2010 at 9:51 am

  62. Anyway here’s the admission of a small error, you bulb headed fool.

    That’s right. I wasn’t here at the time and thought the first tranche of the sale was under Keating. Keating sold part of the CBA and Qantas if I’m not mistaken.

    jc

    January 10, 2010 at 9:53 am

  63. This really has nothing to do with the main discussion rog.

    Semi Regular Libertarian

    January 10, 2010 at 9:54 am


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