The Wild West ... the outback ... The new world of the 1800s was a time of true liberty. People stood on their own merits. They won or they lost and they reaped the rewards or swallowed the consequences. There were no cubicle dwelling civil servants hell bent on saving you from yourself. No planning permits no licenses no permissions no heritage overlay no bylaw no regulators no inspectors. And guess what ... it worked

This site is set up to provide a forum for a number of like minded professional economists to post and comment on contemporary issues. There are a number of regular contributors whose bios are made available on the site. Most if not all of these contributors use a pseudonym for the simple reason that they are practicing economists who must take into consideration the commercial implications of posting their opinions.

While some may feel that this is a bit of a gutless approach it is the only way we can ensure free and open discussion without jeopardising our paycheques.

Thursday, November 12, 2009


WARNING The following blog contains explicit language, sexual references and is unfair in its treatment of the intellectually disabled.

I don’t know if its just me but I pretty sure I saw Lindsey Tanner saying the most incredible thing yesterday ... he said that Kzedong and the gang of four had decided to maintain protection for the Australian publishing industry on the grounds... wait for it ... on the grounds that the protection was rendered ineffective by Internet competition.

Please smack me in the head ... no not enough ... smack me again ... I just don’t get it.

Saying the current arrangements are ineffectual is an argument for giving them the arse, not for keeping them. And it also begs the question as to why publishers and authors fought so hard to retain protection if at the end of the day it was ineffectual and therefore provided them with no benefit.

This decision totally contradicts the advice given by the Productivity Commission, seems to ignore the last 30 years of microeconomic reform, and is at total odds with the idea of increasing productivity within Australia.

Surely they realise that protecting inefficient businesses (and if they cant produce at a market based competitive price they are inefficient by definition) helps no one. Consumers pay more and the sector itself suffers in the long run as it becomes fat and lazy. SHIT ME ... its not as if this is rocket science, its basic industrial policy. Exactly of the sort that has seen Australia’s productivity skyrocket from the mid 80s to now.

The massive increase in productivity attributable to microeconomic reform over this period is the basic foundation upon which our current wealth is derived. The reason we can all afford foxtel and all have 50 inch LCD tvs is because we stopped doing this crazy protectionist crap.

While Kzedong is currently reviling in the perception of his macroeconomic prowess (which is another blog in and of itself) he is starting to rack up an impressive list of microeconomic blunders that include the:

  • The implementation of price caps on gas (amazingly absurd)
  • Grocery watch (otherwise known within the hallowed halls of commonwealth gov as grocery botch)
  • Fuel watch (what can I say)
  • Supporting protection (see Tim Winton)
  • Rolling back labour market reform (thanks Julia)
  • Providing public guarantees for privately generated risks (to a select few)(see the bank guarantees)
  • Funding the liabilities of private companies (see James Hardy)

The idiocy of all this stuff is generally dealt with in the first year of an undergraduate economics course. Its not rocket science, its basic science.

The depressing things is that they seem hell bent on making these mistakes and the amazingly uncritical responses they seem to be getting from the media indicate that we are going to experience alot more of these before the electorate responds.

Here's what Kzedong had to say for himself when questioned about this latest microeconomic lunacy relating to publishers.

"When it comes to our micro-economic reform agenda, it is vast, it is comprehensive, it is across the entire regulatory agenda of the commonwealth and the states ... It is proceeding apace."

SMACK me in the head ... hard .... do it again .... once more just for fun ... I don’t get it.

There is no way Kzedong can be that self delusional. He is shaping up to be the biggest architect of anti-reform in the history of the country. Don’t get me wrong, i don’t think hes doing it intentionally, its simply the result of pursuing an unprincipled populist approach to governance. That and he is in the words of Peter Walsh (former Labour heavy weight and one of the primary architects of the Hawke/Keating reform agenda} economically illiterate.

Lets not be too harsh ... what do you expect from a prime minister with no formal economics training and an arts degree majoring in Chinese language and Chinese history (after all the Chinese are such bastions of economic knowledge).

The uplifting thing is that its consultants like myself and my mates that get paid to fix these things up when they comes to tears (and they will all come to tears). So while I lament the idiocy of the current regime I also thank them for providing me with enough coin to pay the kids tuition at Melbourne Grammar.

Apart from furnishing consultants with a future work stream, one of the other major unintended benefits of this decision is that it allows you to readily identify the economic retards in cabinet. The question of whether to remove protection is such a black a white easy question that anyone who opposed it must by definition be economically retarded.

Its the economic equivalent of a basic physics question, something along the lines of taking someone up to the 13th floor and asking them whether they would like to test the theory of gravity. Jumper = retard. Maybe retards a bit strong. Jumper = arts student.

So which little campers are sitting up the back of the bus? Apparently those in the cabinet most vehemently opposed to the removal of protection were:

  • Arts Minister Peter Garrett,
  • Attorney-General Robert McClelland
  • Industry Minister Kim Car
  • Finance Minister Lindsay Tanner,
  • The chairman - Kzedong.

Well boys is your head protection and there’s the back seat.

As an interesting aside, I’m sure the complete dismissal of the Productivity Commissions recommendations is causing Gary Banks and the lads a fair degree of heartburn. The sale of quickeze at the newsagent down in Collins Place has probably gone through the roof.

The interesting thing is that, while the PC is independent and its commissioners are holders of public office, it is still a government body that depends by and large on the support of government to exist. The PC depends on inquiries, inquires are its reason for existence and it follows that its existence is dependent on government feeding it its inquiries. These inquires cant be generated independently they need to come from the Treasurer.

It is far from clear that there is a space in the new regime for genuine independence. Like any good little dictator Kzedong has been very successful in muzzling discontent in the public sector. If the chairman decides the PC needs to go (or to be brought to heal) he can do this quite effectively by simply starving it of attention inquires, no terms of reference = no reason to exist = budget cutbacks = bureaucratic death = bye bye PC.

While the PC may currently be a little nervous about its place in the world it should at least be applauded for standing up for common sense and economic rationality. It s inquiry report by law must be tabled in parliament, and in doing so it provides the opposition with a wealth of well thought out, authoritative analysis of why the government’s policy on protection is shit ... its like a little pre Christmas present for big mal (lets hope he has the brains to use it).

In closing ... Amazon have some terrific sales on at the moment.