I see PJ O’Rourke is in the country to strut his schtick for the Centre for Independent Studies. He wrote an opinion piece in yesterday’s Oz along predictable lines: the keynesian socialists are squandering our money on all these GFC stimulus measures, when the best thing to do would be nothing at all.
PJ is spinning his propaganda off poor old Adam Smith these days, although he twists Smith’s arguments almost as egregiously as Kevin Rudd distorts Hayek. Apparently PJ has written a book about Smith which I won’t be bothering to read, although I’ve read most of his earlier output. PJ is a bit of a one-trick pony for my taste, although it was a trick I found quite entertaining for a long time. He slags lefties in pretty much the same way Hunter S. Thompson used to do to righties, and I’ve got most of Hunter’s books too.
I was about to put fingers to keyboard for a post deconstructing PJ’s op-ed piece, when I discovered that someone named Fritz had already encapsulated my thoughts in the comment box to PJ’s own article. It just shows you, Murdoch’s “blogs” aren’t absolutely filled with complete morons shouting past each other in the darkness. Fritz said:
It seems to me that this present crisis was born out of a series of financial failures for which the left and right share equal responsibility. So from the Left we had disastrous interference in the market by pressuring Fannie May and Freddie Mac to lend money to people who could not afford to pay it back and from the Right we had the disastrous deregulation of investment banks. The first was based on an ideology of social inclusion; the second based on an ideology that individual companies are in the best position to act in their own self interest. Both were critical errors and led to a massive asset price bubble which encouraged further borrowing and spending beyond our means. Unfortunately for us one of these sides (Left or Right) is in power at any one time and is only willing to address the deficiencies of the other side. So right now we have a lot of discussion about “tough regulation” but nothing about disastrous government interference (did anyone say $43 billion infrastructure project without a business case?). What we need is a middle ground: appropriate levels of regulation which compel companies to be transparent and responsive to their shareholders and minimising government intervention to areas of natural monopoly and social welfare.
I’ve been meaning to mention for some time that I harbour severe doubts about the wisdom and economic viability of Kevy’s $43 billion Telstra Redux plan. Surely they would have been better advised to split the existing Telstra into retail and monopoly landline infrastructure entities, and then regulate the monopoly entity to ensure it allowed access to its facilities to all competitors on a level playing field.
They could let it extract monopoly rents to fund creation of a “fibre to the node” or “fibre to the home” network to the extent that it made economic sense. It might make sense for Korea or Japan or even the US to deliver universal ultra-fast broadband to the entire population. But for a sparsely populated, huge island nation like Australia I suspect there are large swathes of the country where the cost of installation vastly exceeds the benefit of rapid porn and feature movie downloads or high quality Skype videophone links (which is all 99% of users will employ it for). Businesses, research and scientific or medical isntitutions that can no doubt benefit significantly from ultra-fast broadband will continue to be located in major centres anyway, and ultra-fast broadband makes commercial sense in those places anyway.
As for the $900 stimulus payment, its only evident benefit where I live is that the local indigenous itinerants have temporarily upgraded their consumption patterns from the cheapest Coolabah casks to slabs of VB and six packs of Jim Beam and Coke. I have faith that this is an enormous benefit in reducing the depth of the recession.
Oh yes, and then there’s my daughter Bec and her boyfriend Cian who are studying together in Melbourne. They’ve made Kevin and Wayne very happy and just blown their $1800 on a brand new plasma TV. That must have injected at least, oh, three or four hundred dollars into the local economy as the rest got shipped back to the Korean supplier. Who could question the economic sagacity of such a plan?