Claiming credit

In New Matilda Ben Eltham asks “Yesterday’s GDP figures show the Government’s fiscal strategy has worked, writes Ben Eltham. So why isn’t Labor saying so?”

Well yes, they do show that they worked (like some of us commonsensically suggested they would) and Labor is saying so. WTF?

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John Humphreys
12 years ago

The GDP numbers don’t show the government fiscal strategy worked. Household spending went up by all of 0.6%. Meanwhile, business investment went down by 6.1%.

If they want credit for shuffling resources around the economy, they should take “credit” for both parts. And while a short-term small bring forward of spending might look nice in an excel spreadsheet… it is investment that drives long run growth and employment.

The positive growth was caused by net exports. Domestic expenditure was -1%… but higher net exports took GDP up to +0.4% (and it should be remembered we also have a population increase of about +0.4% per quarter).

derrida derider
derrida derider
12 years ago

Err, John, that business investment figure was not all that bad because it comes from a very high level – we had an investment boom, remember? It’s certainly minor compared to the utter collapse in investment seen in the rest of the developed world.

And Nic is right – it’s not the stimulus that drove investment down, but it’s the stimulus that held consumption up.

While it is true that it was a bit of a fluke on the net export side that avoided a “technical recession”, even without that these numbers are far better than we had a right to expect given the size of the economic tsunami that has engulfed much of the world. Government putting money in consumers’ pockets is one reason for that.

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[…] Rudd government are claiming vindication so too are its supporters. Some of them anyway, others are more cautious. My view on the National Accounts and the stimulus […]

Butterfield, Bloomfield & Bishop
Butterfield, Bloomfield & Bishop
12 years ago

I am interest in real unit labour costs falling in the midst of a recession.

I do not recall that happening previously which suggests unemployment mightn’t rise as many think.

I think John has caught John Taylor’s disease.

John Greenfield
John Greenfield
12 years ago

Nicholas

I think this rather shows that capitalism – neoliberalism or otherwise – is far from dead or even ill. It is not even having a Bex and a good lie down. The Rudd Labor government – and its economist courtiers, such as Professors Quiggin and Keen – very cleverly hyped “the worst economic crisis since the 1930s depression” which was always balderdash, never supported by data.

The halcyon days of the so-called ‘Keynesian’ and ‘social democracy’ triumphs are never to return. They will remain museum pieces, relevant to discussions of the 1950s and 1960s.

Capitalism has never gone away, and is currently putting the pedal to the metal. I put my money where my keyboard was a month ago and went long ASX200 calls. The profit so far will more than pay for a first edition copy of Marx’s Capital Vol. 1 ;)

Joshua Gans
Joshua Gans(@joshua-gans)
12 years ago

…very cleverly hyped the worst economic crisis since the 1930s depression which was always balderdash, never supported by data.

It seems the IMF pedaling the same balderdash., too, JG.

Even assuming vigorous macroeconomic policy support and anticipating a moderation in the rate of contraction from the second quarter of 2009 onward, global activity is now projected to decline 1.3 percent in 2009, a 1

John Greenfield
John Greenfield
12 years ago

Hey James, if your thang is to go through life hiding behind arguments from authority, poor you. Dude, don’t you get it? The IMF is staffed by pencil-neck economobots taught by the likes of Luvvie Quiggin, who are freaking clueless about what has happened over the past 12 months. Every single comment and divination they have made, has proven to be idiotic.

I have just posted on how silly they are, and the coin I am banking as a result. I have NEVER read an IMF Report, but if that is how you get your jollies, and source your blog arguments, I feel for you, my brother.

John Greenfield
John Greenfield
12 years ago

James

While it is your choice to stay cocooned within the “Quiggin Social Democracy Neoliberalism is Dead All Stars”, you have shown much evidence in the past of cognitive flexibility especially when presented with data. You’ve never struck me as one of these ideobots. Thus, you might want to devote a little bit of your time to my view. For example, the latest US jobs data might interest you.

US job losses softened markedly last month, sending one of the strongest signals yet that the severe recession which has already cost the economy over six million jobs is winding down.

Anthony Solis looks over job postings inside the Riverside Workforce Development Center in California. Picture: Bloomberg News
Still, another jump in the unemployment rate to a fresh 25-year high served as a sober reminder that even if the economy does stabilize in coming weeks, a rapid return to growth is unlikely given the pressures households face from a sluggish labor market.

Non-farm payrolls slid 345,000 in May, the US Labor Department said Friday, well below the 525,000 decline economists in a Dow Jones Newswires survey had expected. Last month’s drop was the smallest since September 2008, when the recession intensified in the wake of the collapse of Lehman Brothers.

http://www.theaustralian.news.com.au/business/story/0,28124,25595920-643,00.html

Oh, and if you want to know where my calls currently are, just ask! ;)

Tel_
Tel_
12 years ago

It seems the IMF pedaling the same balderdash., too, JG.

One day the IMF will put a foot right and maybe achieve something worthwhile. I sure hope I live to see it. I’m a supporter of Capitalism, but I’m also realistic about some of the problems of a Capitalist economy, and some of the advantages of Central Planning. Here’s a bit of a left-field point of view of the IMF and US hegemony over South America:

http://upsidedownworld.org/main/content/view/1687/60/

Trying to look at it through the South American perspective, Capitalism failed them because Capitalism was delivered through the IMF (always Washington’s puppet), and Capitalism came to them not as honest grass roots neighbour trading with neighbour, but as a force externally imposed (at gunpoint for the most part). For the USA, South America has long been a convenient source of cheap natural resources. For the South Americans, Socialism (and not the “luvvie” coffee shop Socialism that John Greenfield loves to sneer at) has been their logical tool for achieving that most basic military capability — self determination. In achieving this simple aim, it worked OK.

Obama can have fun with his unsustainable spending, but the USA will never again find South America a soft target for takeover, and further military needling will just see the Socialists grimly clinging together (like a giant Cuba), not really knowing how to run a modern economy, but completely determined not to get raped while someone else runs it for them.

So what were you saying about the IMF pedaling something?