Tuesday, February 8, 2011

The Magpie squawks!

Commenting on "Credit Where Credit is Due (II)", a regular from another site (a micro-blogging one) said:

"Magpie - Squawk once if you are being held captive by a journo and being forced to say those words."

It took some more reading to understand what my friend (let's call him Z) meant. Basically the idea is that the "mateship" levy, intended to partially fund the disaster relief measures, is not needed: the additional spending should be funded via budget deficit.

Z certainly has a point there.

For one, public debt in Australia is ridiculously low. Given the amounts set for relief, the Federal Government could simply add to the debt, without any spending cuts, and without any ill effect.

In fact, the Federal Government could probably fund much larger relief measures with no inflationary pressures, according to some local chartalism proponents (chartalism or MMT is a Post-Keynesian school of economics, and I believe Z is a chartalist).

Another reader (let's call him A) wrote to me that "the f%@*%g mining industry should be made to pay, they broke it, they fix it". That idea, I believe, is somewhat related to Bob Brown's proposal. I also think the mining industry is the most likely culprit for the damages and almost surely the ultimate beneficiary of the relief measures, so it would make sense for them to pay.

Bottom line, from very different perspectives, both commentators agree that the levy is a bad idea.

I agree with those criticisms. Further, I'd say one would be justified to conclude the whole idea is no more than window-dressing, designed to:

  1. Show that the Labor Government helps those affected,
  2. Keep Labor's "fiscal conservative" image intact, and
  3. Avoid touching any powerful interests.

However, that's not why the whole thing has been criticized by mainstream media, journalists, politicians and economists.

It has been criticized because:

  1. Australians should freely decide how to help,
  2. It should be funded entirely through spending cuts elsewhere,
  3. It shows that there is "plenty of fat to cut", and
  4. The mining industry is the best thing to happen to Australia since the invention of sandwich bread. (These 4 objections were formulated in the last episode of ABC's Question and Answer, 07-02-2011, here).

And that is naked, shameless ideological bias.

As I see it, Mr. Gittins rightly addressed those 4 criticisms, and for that reason I find it fair to praise him.

True, he did not address the criticisms my friends and correspondents made (or those that yours truly would have added). Still, it's a step, maybe a little vacillating, in the right direction.

Lastly: Guys your comments are welcome here. If they are good, well-thought objections, as they were, I promise (cross my heart and wish to die), I'll be good and behave myself.

Or else, I can always reply, as I did to Z:

"Instead of simply 'squawk, squawk' I'll try a crow's call: 'aw, aw, aw, aaah'!"

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