Friday, December 19, 2014

More from the Creighton files

I see that Adam Creighton returns to the line I noticed appearing recently from the Say's Law obsessive Steve Kates at Catallaxy - that the depreciation of the Australian dollar is now, according to these anti-Keynesian, simplistic, government-must-tax-and-spend-less-obsessives, not such a good thing after all.  It hurts people's buying power, don't you know?  

I wrote about this once before, at some length, but it remains all a bit rich, doesn't it?   As I noted then, Sinclair Davidson in 2009 argued that the "price signal" of an increasing dollar meant that Australia had to cut costs or improve quality to keep its exports attractive. I wouldn't mind betting that Creighton and Kates would argue that business and government should still cut costs because that always makes things better, and lets the government return to budget surplus so as to enable the dollar to rise to improve the lot of people who want to holiday overseas and buy their sneakers on line instead of supporting a local shopkeeper.

Businesses and government running things efficiently is obviously a good thing economically.  But the assumption that the answer to everything is "cut costs, cut spending" has to reach a point of diminishing returns somewhere, but you won't hear it from this school of economists.  (Or, in the case of Judith Sloan, if they mention it once - as with her brief advocacy of increasing unemployment benefits - they never like to mention it again.)

And there is this continual thing I see now, repeated by Creighton today, that they really, really like the on line purchasing on the global market, and hate the idea of anything increasing the cost of that (such as trying to make sure too much GST is not avoided that way.)   They also really enjoy their overseas holidays.  (Creighton completely fails to mention the Australian tourism industry - yet it is surely one of the biggest parts of the economy that suffer under a high dollar.)

Now, it's true, I have had Labor voting relatives on a double income with no kids complain about how much tax they were paying under the Howard government, so I know self interest doesn't flow only on one side of politics.   Nonetheless, it is very, very difficult not to conclude that the motivating factor on the small government, CIS/IPA, libertarian side of politics is basically simple selfishness.  "It's my money, leave it alone!"  is what it so often comes down to.

Update:  OK, maybe I am being mean to Adam by already not acknowledging his advocacy for an inheritance tax.  His line is more "it's my money, leave it alone, until I'm dead."    And in any event, his advocacy of it was only on the basis that his taxes while alive are reduced, so I'm not sure that he deserves much credit for altruism for that line of argument.

1 comment:

Not Trampis said...

Only a government can devalue or revalue. When you have a floating currency it depreciates or appreciates.
In terms of Australia it rose when commodity prices reached giddying heights but it did not fall when commodity prices fell to Treasury and the RBA's chagrin.

Abbott will lose if it doesn't fall much much further and so nominal GDP can rise as it has in the past.

THIS is the reason why the ALP lost/ Weak nominal GDP