March 29, 2009


Rudd on the road to disaster (Henry Ergas, March 30, 2009, The Australian)

DURING the 1979 oil shock, the great French political scientist Raymond Aron noted that in crises, governments usually had little to fear from Oppositions but everything to fear from themselves. Only rarely did governments display the intellectual rigour to adapt to the new circumstances. Their tendency, catastrophically evident in the presidency of Valery Giscard d'Estaing, was to retain commitments that were even more economically costly than when first made. Emerging difficulties then led to half-baked populism, with all its long-term costs.

Kevin Rudd could teach Giscard d'Estaing a thing or two.

Rudd's errors are not merely the odd concession to economic folly, they go to the core of our economic prospects. [...]

Ultimately, all government spending must be paid for from taxes that have high economic costs. To claim that Keynesian multipliers create magic puddings that can make this all come good is nonsense on stilts. A dollar misspent is a dollar misspent, and reduces incomes by at least that amount. The employment "created" by that dollar, when it could have been used for more worthwhile alternatives, is part of the waste, not a benefit. The quality of public expenditure is therefore crucial and on this count alone the Government's record is distressingly poor.

It hardly seems fair to blame this on Rudd or d'Estaing or Obama when the point is that a crisis is the least likely time that you can convince folks in a democracy that the product of your intellectual rigor is better medicine than what they're used to. Indeed, the best you can probably hope for is the sort of stasis that our checks and balances can provide. Crises are the worst times for parliamentarism.

Posted by Orrin Judd at March 29, 2009 8:27 PM
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