All posts by Gerard Jackson

Economics, natural resources, economic growth and Malcolm Turnbull’s ignorance and conceit

Gerard Jackson

In January 2007 Malcolm Turnbull, the man who would be prime minister, was appointed Environment Minister. He immediately supported the destructive policy of a 20 per cent renewable target for 2020. Needless to say, he was a fervent supporter of an equally destructive carbon tax. In his arrogance he saw fit to attack consumer choice by forcing Australians to buy expensive compact fluorescent lights in order to satisfy his sense of moral and intellectual superiority and statist mentality. To put it bluntly: Turnbull is an ignorant, egotistical and destructive man. Continue reading Economics, natural resources, economic growth and Malcolm Turnbull’s ignorance and conceit

The minimum wage and defending the free market

Gerard Jackson

I am frequently asked why free-market thinking in Australia doesn’t seem to be making any headway against the statist thinking. Needless to say, these people also expressed considerable disappointment in Tony Abbott’s economic record, which brings me to the right-wing’s sorry record. No serious scientist ever disconnects from first principles, and the same should go for economists. Unfortunately, first principles are something that our self-appointed advocates of the free market seem incapable of applying, particularly when it comes to the pricing of labour. And this is why, after more than 30 years of intellectual grandstanding, they have failed dismally to persuade the great majority of Australians that the effective minimum wage destroys jobs. Continue reading The minimum wage and defending the free market

To argue that consumers are not rational is to argue for more state control

Gerard Jackson

A reader directed me to an article in The Atlantic that purported to explain Why Economics Is Dead Wrong About How We Make Choices. Being aware of the anti-market prejudices of so-called journalists I expected the worse: my expectations were not confounded. Derek Thompson, the author of this little masterpiece, tells his readers that “[t]he old economic theory of consumers says that ‘people should relish choice’.” Bulldust. Economics has never said any such thing. The extent to which individuals should or should not “relish choice” is a matter for them to decide. Having displayed his ignorance of classical economic thought he then approvingly quoted Daniel McFadden who states: Continue reading To argue that consumers are not rational is to argue for more state control

Economic growth, the minimum wage and sloppy economic thinking

Gerard Jackson

Now for some light entertainment. A number of leftists absolutely adore Ross Gittins (economics editor of the Sydney Morning Herald and an economic columnist for The Age). While these leftists rhapsodise over Mr Gittins’ unparalleled grasp of economics I find myself less than impressed with his opinions.

So how good is Gittins? On reflection, that should read: Just how bad is Gittins? Last July he revealed his deep understanding of economics in an article in which he basically agreed with certain so-called economists that there is no direct link with the minimum wage and the unemployment rate of marginal labour1. (Minimum wage rises don’t lift unemployment, analysts agree, Sydney Morning Herald, 12 July 2014). However, this post is not about Gittins’ failure to understand what is happening in the field of economics with respect to the minimum wage but his history of sloppy economic reasoning, of which the aforementioned article is one of his most recent examples. Continue reading Economic growth, the minimum wage and sloppy economic thinking

More Keynesian fallacies and the Great Depression

Gerard Jackson

Nottrampis posted a comment criticising my attack on Keynesianism. The following is my response. It is not meant to be a rebuttal but more of an outline of my views. In the very near future I shall expand in far greater detail on each of my points.

Now where to begin:

1. Demand springs from production, not the other way round, a fact that is patently clear in a barter economy. Of course, if it were a simple case of demand bringing fourth production then poverty would never be a problem. Keep on increasing ‘demand’ and eventually you will make everyone as rich as Warren Buffett. Continue reading More Keynesian fallacies and the Great Depression

Tony Abbott’s lousy economics and the menace of Keynesianism

Gerard Jackson

I have been asked a number of times what the hell is wrong with Tony Abbott. The answer is simple: The same thing that is wrong with the Liberal Party. The Liberals are still largely governed by statist thinking and Keynesian economics. It is a party without a grasp of sound economic theory, any knowledge of the history of economic thought and thoroughly ignorant of economic history. James Guest, former Liberal MP, is a perfect and depressing example of this dangerous mixture of sanctimonious witlessness.

Five years ago James Guest did the public a service by openly displaying his staggering ignorance of these subjects in an article he wrote for Quadrant in which he attacked Steve Kates for rightly taking issue with the Labor Government’s reckless spending policy to counter the recession. (One can read Kates’ tepid response here). Continue reading Tony Abbott’s lousy economics and the menace of Keynesianism

Tony Abbott finds his inner central planner causing Mises and Hayek to rollover in their graves

Gerard Jackson

It seems that the Tony Abbott administration has discovered its inner central planner by approving a “competitiveness agenda” (code for industry policy) that will use taxpayers’ money to fund those economic activities where Australia has the greatest advantage, leading one to wonder why they would need public funding if they are that strong. Picking winners always leads to even greater political meddling in the economy and, if implemented, Abbott’s proposal will be no different. His policy also envisages ‘cooperation’ between businesses, training colleges, universities and schools. Funny thing, though, is that Mussolini had a similar vision: he called it corporatism. Continue reading Tony Abbott finds his inner central planner causing Mises and Hayek to rollover in their graves

The minimum wage, economics and dishonest studies

Gerard Jackson

Nottrampis made comments about my post on wages and the fallacy behind union bargaining. My thesis, as he called it, is an economic law. To wit: if you price the services of any good above its market clearing price you will get a surplus. And that also goes for labour. The Great Depression testifies to that fact.

Arindrajit Dube is one of the 5 so-called economists that Nottrampis referred to. Now if Dube’s ‘analysis’ were right then there would be no youth unemployment in America. Yet when he published his study in 2010 youth unemployment had averaged about 18 per cent for the year. It is now 2014 and he is still peddling his snake-oil even though youth unemployment is still being reported at crisis levels. Continue reading The minimum wage, economics and dishonest studies

Passing thoughts on wages and the fallacy behind union bargaining

Gerard Jackson

My post on the minimum wage got me involved in a couple of exchanges regarding the determination of wages rates in the market place, hence this post. Now free market economists are perfectly correct in pointing out that unions justify their existence on the basis of the alleged “imbalance of bargaining power” that lies with employers. According to union apologists, particularly in the media and the Australian Industrial Relations Commission, employees must combine if they are to get a fair wage.

Unfortunately, these economists rarely attempt to explain why the “imbalance of power” concept is another dangerous fallacy. This is a particularly egregious failing on their part considering that union apologists have sometimes even drawn on the writing of Adam Smith in support of their actions. In fact, one could even argue that it was Adam Smith who fathered the “imbalance of power” idea. According to Smith: Continue reading Passing thoughts on wages and the fallacy behind union bargaining