What on earth are the Liberals doing?

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Subject: What on earth are the Liberals doing?
Volkodav 11/27/2009 2:06:55 AM

Didn't they learn anything from the last election? Don't they know you have to listen to the Australian Public in general, not just the extreme right of the NSW party if they want to be returned to power anytime soon? Morons, at least Howard had the brains to listen to the people and would compromise to satisfy the majority. Until the Libs rid themselves of the toxic minority (Abbot, Tuckey, Minchin and co)they will be unelectable. I was glad to see the back of Howard but I definately don't what the decade or more of Rudd we will cop if the Libs don't clean out their house soon. As it stands now the next election will likely decimate the Libs and the one after will see them claw back, hopefully with some new blood that actually has some talent instead to the selfish (brainless)ignorance being displayed by the rightwing ideologues who are screwing the party at the moment.

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FJV 12/7/2009 6:11:18 PM

There are certain cases where economists specializing in foreign trade can mathematically prove that free trade is not the best option..

This is not an unreasonable statement. Either you accept this or not.

I plan on making people who do not accept this irrelevent by voting social democrat, because I sure as hell do not want a 30 year long trade deficit.

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bigfella 12/8/2009 2:44:49 AM

At the risk of returning to the topic at hand - Abbott looks determined to make the Libs unelectable. Barnaby Joyce as Finance Minister. Ruddock, Bishop & Andrews back in the Shadow Cabinet. Talk about 'back to the future'. meanwhile younger members have been shunted aside for not being right wing enough. So much for party renewal, this is a hell for leather ride to oblivion. Strap in folks, it is going to get VERY strange from here.

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Hugo FJV 12/8/2009 3:34:28 AM

There are certain cases where economists specializing in foreign trade can mathematically prove that free trade is not the best option..

This is not an unreasonable statement. Either you accept this or not.

I plan on making people who do not accept this irrelevent by voting social democrat, because I sure as hell do not want a 30 year long trade deficit.

What are you talking about? Free trade has little to do with the political economic discussion at hand. Free trade is not a position held exclusively by the Austrian School.

Even if it was, the fact that it is mathematically possible to show that in some cases free trade is not optimal for a particular country is entirely irrelevant. First, that particular country needs to supply so much of a particular good that their own domestic production levels can cause a significant shift in world trade prices - making it beneficial for that single market only. That may (or may not) have been relevant for say Australian wool in the late 19th century or perhaps US aluminium for a short period of time. But I cannot think of a single good today where one market's production is so large that they can cause to effect the international price to such a degree as to be a net beneficiary. What have you got in the Netherlands that comes even close to qualifying - tulip bulbs?

You are the one who stated that those subscribing to academic theories are not scientific and here you come up with a mathematical model that can, under certain unrealistic scenarios, show that restricting trade can benefit a single market. But you seem to ignore the fact that free trade advocates point to a net gain in trade. Ronald Coase made it clear a long time ago that net gains could be worked to compensate the single party foregoing an individual gain.

Further, you neglect to note the negative consequences of restricting free trade. The Arab countries restrict free trade by restricting oil output - the result? Societies with huge income differentials, a small parasitic elite who politically repress the majority, corruption, a lack of the rule of equal law and technological backwardness. Those are facts FJV, not some academic mathematical model using bullshit assumptions derived by some post-keynesian professor in a small office in Rotterdam doing freelance work for the Dutch Labour Party.

But you go ahead and keep voting socialist - clearly you know what it is you are talking about.

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Volkodav 12/8/2009 6:07:29 AM

Both the Liberals and Labor are moving to the right. For Labor, I suspect, this is due to their traditional constituents, trades people / trade unionists, becoming more educated and more open minded forcing Labor to do likewise. This move to the right has made Labor more acceptable to para-professionals and professionals but has left behind many less skilled, less educated workers who are more vulnerable, therefore more frightened than their more successful neighbours.

Frightened vulnerable workers fear losing their jobs, among other things, and will support the party they believe will look after them. Refugees, immigration, environmental legislation (taxes) are seen as threats by this group of voters and the party that opposes these things is seen as their friend / protector. Labor in their move to the right has also become more politically correct, dropping their racist, discriminatory policies that were seen in the past as protecting Australian workers.

There is a chance that Abbot will attract these voters that Labor has discarded. On thinking on the matter I wouldn't write him or the Libs off yet.

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bigfella 12/8/2009 7:13:20 PM

There is a chance that Abbot will attract these voters that Labor has discarded. On thinking on the matter I wouldn't write him or the Libs off yet.

He certainly could make a populist lunge for disaffected labor voters - perhaps the sort attracted to Hansonite ideas. The big problem he faces, however, is his ideological committment to a 'Workchoices'-style industrial relations policy. The same people who feel left behind by Labor's shift to the professional classes & who can be scared by migrants, refugees & taxes are by definition those who feel particularly vulnerable. My bet is that Labor can scare them at least as effectively with a well targetted campaign on industrial relations. An immigrant might take your job at some unspecified point in the future, but your employer is someone you deal with daily.

I am still not sure on Abbott. On the one hand, he will do better than expected. He has to. I can't think of an opposition leader who has taken over with lower expectations. Having said that, his shadow cabinet appointments & his ongoing personal ill-discipline when it comes to opening his mouth seem to confirm my original suspicions about his electibility. There is also the issue of bitterness within his own party. The moderates feel robbed & it looks like Turnbull plans to go down in a blaze of glory. Even a very good leader might struggle with this, and I really don't think Abbot will be that good a leader.

He will be a different sort of challenge for Rudd, and more of a team effort than a one man band might be a good approach. Force people like Ruddock, Andrews, Bishop (either will do) & Joyce further into the spotlight. To some extent you just need to let Abbott talk for a while & he will mess up. Rudd's biggest challenge is probably going to be rising interest rates. The government needs to evolve an effective response to this. it also needs to avoid gettig dragged into a big debate on the ETS. Despite the fact that governments are supposed to take hits mid-term, labor has been sitting at 56% in two party preferred votes (or better) since the election. With seat redistributions even a few points lower than this would mean heavy Liberal losses. If the Monk drops more clangers over the next 12 months or there are more cracks in party unity bad could easily become worse.

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Hugo 12/10/2009 3:23:47 AM

My apologies for having helped swerve this thread off a potentially more constructive track. I'd like to ask FJV, if he ever plans to answer my questions and defend his position, to open a new thread where I hope to read of his understanding of Austrian Economics (AGA and BigFella I would also be interested in hearing from you as regards your support of Keynesian theory) and his opposition to its principles.

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Aussiegunneragain 12/11/2009 6:05:40 PM

Well here is the ALP's list of economic achievements from their 13 years in office, the last 3 that they only got because Paul Keating was kissed on the dick by an angel in the form of John Hewson, who would have introduced even more radical reform.

1. Financial market reform including floating the dollar (started by Howard with the Campbell Report but Fraser wouldn't implement the toughest recommendations).

2. The Accord (Marks 1 to 7, until it was dumped as a bad idea and enterprise bargaining was introduced)

3. Enterprise bargaining

4. Tariff reform

5. Deregulation of the airline industry and the sale of Qantas

6. Sale of the Commonwealth Bank.

7. Tax reform (essentially introducing FBT, CGT and Dividend imputation, but squibbing on a GST).

9. Independence of the Reserve Bank (in 1993, after Keating had screwed up our monetary policy during the recession)

10. National competition policy (started it in 1995 and continued by Howard)

11. The move to enterprise bargaining (when they eventually started to get IR reform right)

12.The superannuation guarantee

13. Helping to establish the Asia/Pacific Economic Co-operation forum.

14. Reduced subsidies to loss making industries

15. Breaking the pilots strike

You can minus one for the Beazley Budget Black Hole in the early 90's.

Comparing the two lists I think that the Coalition did a very respectable job of economic reform during their 11 and a 1/2 years in office, especially during the first 4 or 5 years. You can add market-based reform of the health care sector and keeping the Budget in such a shape that Rudd could afford the stimulas package to that list as well.

As for predictions of the future, I think that I've got a better chance of predicting the consequences of today's woeful economic policy environment than you do of predicting what will happen with the Liberal Party leadership and future elections. The type of economic stagnation that I am describing is just what you get when you have an entrenched, populist government with no commitment to fiscal discipline and market-based reform ... it has happenned the World over again and again and it will happen here because people won't learn until it is too late. Whats worse is that Abbot isn't even committed to small government himself and he has that moron Joyce in a key economic portfolio now, banging on about locking out Chinese foriegn investors and splitting up banks. My only hope is that Abbot gets thoroughly thrashed at the next election and the Libs go back to Turnbull with their tail between their legs. Heis the only one with the brains and the balls to do the job (Hockey certainly doesn't) and hopefully he will have learned a bit about leadership during the latest frackas.

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Aussiegunneragain Hugo 12/11/2009 6:34:25 PM

Well at least now you have dispensed with the fascade that you are remotely interested in a "tool box" appraoch to economics and are admitting that you don't have an open mind beyond the notions of the Austrian School. I don't have any desire to get into a lengthy discussion about the assumptions of the New Classical/New Keynsian synthesis though ... that has been done thousands of times by more qualified people than you and I and if you want to read about it you shouldn't have any trouble finding the appropriate resources. The only point that I would make is that the overarching issue for me when it comes to the decision to stimulate or not to stimulate an economy during a downturn is the political decision about the extent to which we are prepared to forgo a proportion longer term growth (due to government debt and the muting of the lessons for businesses and individuals arising out of the recession) to ensure economic security in the short term. That isa normative rather than a positive judgement for the society in question.

On supply side economics, you misunderstand the intent of why I consider the thinking of the school useful. The objective isn't to maximise taxation income, but is instead to provide a strong theoretical argument to provide a hard limit on the level of taxation that a government should impose. It allows small government economists to say to big government ones "if you propose to increase taxation rates above x then economic activity will decline and so will taxation revenues, so what would be the point in that?" This doesn't mean that I don't support the idea of reducing taxes even when it would result in a reduction in taxation revenue but an increase in economic activity ... I would rather see the money in the private sector.

You also misunderstand the benefit of monetarist thinking. Basically it was their ideas that got governments out of day to day macroeconomic management through fiscal policy and ultimately led to central banks that are independent of government. That is a far better situation than the fiscal interventionist mentality of the original Keynsianism. Incidentally, the monetarists actually didn't want the central banks to be activist, rather they wanted them to maintain neutrality in money supply and Milton Freedman wasn't even a fan of central banking but decided that given that it existed he would make it as workable as possible.

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Aussiegunneragain FJV 12/11/2009 6:45:45 PM

The article that you posted here on free trade is a load of crap, but is only what I would expect from a protectionist author. It is based entirely on the twin premises that:

1. there will be immediate winners and losers from trade reform, and that the losers are incapable of taking the opportunities that arise out of free trade to become winners; and

2. countries are incapable of establishing that there are benefits to them from free trade and negotiating over the course of time to reduce trade barriers in a way that benefits everybody.

Both premises reveal a miserable lack of faith in the ability of people and nations to take control of their destiny and make the hard decisions that are needed to do what is good for them. I for one am not buying it to it.

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Aussiegunneragain Oops 12/11/2009 7:24:26 PM

1. Financial market reform including floating the dollar (started by Howard with the Campbell Report but Fraser wouldn't implement the toughest recommendations).

2. The Accord (Marks 1 to 7, until it was dumped as a bad idea and enterprise bargaining was introduced)

3. Enterprise bargaining

4. Tariff reform

5. Deregulation of the airline industry and the sale of Qantas

6. Sale of the Commonwealth Bank.

7. Tax reform (essentially introducing FBT, CGT and Dividend imputation, but squibbing on a GST).

9. Independence of the Reserve Bank (in 1993, after Keating had screwed up our monetary policy during the recession)

10. National competition policy (started it in 1995 and continued by Howard)

11. The move to enterprise bargaining (when they eventually started to get IR reform right)

12.The superannuation guarantee

13. Helping to establish the Asia/Pacific Economic Co-operation forum.

14. Reduced subsidies to loss making industries

15. Breaking the pilots strike

You can minus one for the Beazley Budget Black Hole in the early 90's.

I double counted enterprise bargaining in my list of the ALP's reforms.

Incidentally, in the Henry Review TOR's (link below) changes to the breadth and level of GST are explictly ruled out, as is any presumption of smaller government. Good luck to us getting any real structural tax reform out of that farce. The OECD recently did a study on the impact of different types of taxation and found that they are rated as follows, in order of the least

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