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?
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).
John, do you think that the cash handouts drove investment down?
Do you think that in handling the way the economy tracks for the next quarter or two the government should only think of ‘long term growth and employment’?
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.
[…] 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 […]
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.
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 ;)
It seems the IMF pedaling the same balderdash., too, JG.
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.
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.
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! ;)
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?