20 February 2023
Jim Chalmers, Australia’s brilliant treasurer, has taken it upon himself the modest task of redesigning the country’s economy. That free economies were never designed in the first place is a fact of which Mr Chalmers is blissfully ignorant. Intent on remaining oblivious to reality he penned an intellectually pretentious 6,000 word essay1 revealing his colossal ignorance of both economics and economic history. Blind to his own intellectual shortcomings he grandly regurgitates Mariana Mazzucato’s neo-fascist economic policies2, policies that Mussolini called corporatism3. It’s no wonder the World Economic Forum considers her to be one of its biggest intellectual stars.
Like every statist before her Mariana Mazzucato, a professor in the Economics of Innovation and Public Value at the University College London, adores the ‘state’, attributing to this mythical entity intellectual powers so remarkable that she seems to think it invented everything from the wheel to sliced bread. What I found strange was not her primitive worship of the ‘state’ but her failure to define it. So what is the reality of the state? It is nothing more than those who govern us and the bureaucracy that is supposed to serve us. In Mazzucato’s fantasy world these people, meaning the likes of Jim Chalmers, Anthony Albanese, Malcolm Turnbull, etc., have the astonishing ability to pick economics winners and even determine which technologies will work and which ones will not. They even have the power to foresee and design markets. No wonder Chalmers loves her.
Given Mazzucato’s statist mentality in which the ‘state’ is the real engine of economic progress it is no surprise then that she is deeply antagonistic to genuine entrepreneurship. This is revealed in her hostility to any attempt to cut capital gains taxes which, in her humble opinion, only succeed in “emptying the government’s own the pockets”4, an opinion shared by the economic illiterates who run the Democrat Party5. Of course, it never occurred to this brilliant economist that the only money governments have was drained from the pockets of the public.
Continue reading Jim Chalmers loves Mariana Mazzucato: and that’s bad news for us
20 February 2023
I ended part I with the observation that if the monetarists had taken note of the work of classical economists they might just have realised how much they had underestimated how insidiously disruptive money is when badly managed. In turn this realisation may have led them to ask why the Austrian school of economics stresses the heterogeneity of capital. That Friedman knew all was not right with his quantity theory was hinted at in the following statement with respect to a secular fall in prices:
[T]he price level fell to half its initial level in the course of less than fifteen years and, at the same time, economic growth proceeded at a rapid rate. The one phenomenon was the seedbed of controversy about monetary arrangements that was destined to plague the following decades; the other was a vigorous stage in the continued economic expansion that was destined to raise the United states to the first rank among the nations of the world. And their coincidence casts serious doubts on the validity of the now widely held view that secular price deflation and rapid economic growth are incompatible1.
There was a similar price phenomenon in Britain which saw wholesale prices fall by about 47 per cent from 1873 to 18962.
Continue reading Monetarism and its critics why they were both wrong, part II
How was the Liberal Party reduced to its present sorry state? In a sense the Liberal Party at both state and federal levels really consists of two specific groups. There is the establishment that treats the membership with disdain and then there is the party’s shrinking base. The job of the base is pay-up and shut up. It is there to man polling booths, hand out leaflets and wave placards, nothing more, other than pay party dues. To the establishment the idea that any member of the base could have something of value to say is considered risible. Victoria is a perfect test case for this scornful attitude. Party bluebloods like Michael Kroger and David Kemp set out to make it impossible for informed members of the base to make themselves heard. Kroger ensured that members of the base would not be allowed to use the Liberal Speakers Group as a means of communicating ideas and informed opinion to their fellow Liberals. It is because of these characters that Menzies “forgotten people have returned”.
Continue reading The Australian Greens and their Liberal Party allies part II
13 January 2023
Since posting my critique of Keynesianism I’ve had a number of requests to write something on monetarism and why it seems to have failed. Monetarism rests on the basic economic truth that inflation is a monetary phenomenon. From this the Chicago monetarists drew the conclusion that control of the money supply is the means to control inflation and stabilise the economy. The opinions of two Australian critics encapsulates the views of most critics. According to Ross Gittins “monetarism was wrong and didn’t work” and was “built on assumptions that didn’t hold. Moreover, “money was something hard to define and measure in practice.”1 Alex Millmow argued that
Continue reading monetarism and its critics: why they were both wrong, part I
6 February 2023
The manner of the decline and virtual destruction of the Victorian state Liberal Party helps explain the role so-called ‘moderates’ and cynical opportunists played in bringing down the Scott Morrison government thereby advancing the Australian Greens’ anti-growth policies.
In 2002 election year the Victorian Liberal Party, always ready to shoot itself in both feet, replaced as leader of the party the disastrous Denis Naphine with the catastrophic Robert Doyle. The result was a humiliating and unprecedent electoral route. Determined to take the Liberal Party further down the road to political oblivion the ‘moderate’ Mr Doyle haughtily declared in 2003 that Victoria needed to implement “sustainability” policies because the free market is a menace to the environment.
Continue reading The Australian Greens and their Liberal Party allies part I
6 February 2023
I finished part one with the observation that defining saving as income minus saving is misleading. An increase in the demand to hold money is not an increase in savings. Cash balances and savings perform different functions. Keynesians make no distinction between savings and cash balances; therefore they can, and do, assume that savings are not spent. But as Ricardo pointed out: “To save is to spend.”1
The ‘problem’ of equality between savings and investment arises when we define savings in purely monetary terms (which we usually do) and investment at given prices. When investment exceeds savings we have inflation. The excess investment means that the banking system has created new credit. This led some economists to jump to the absurd conclusion that we can have investment without savings. They obviously have not heard of ‘forced savings2.
Continue reading Keynesian dogma is creating our economic crises, not the free market part II
30 February 2009
The global economic crisis that the reckless monetary policies of the world’s central banks visited upon us still leads the great majority of economists, economic commentators and know-all pundits mislabelling the situation as one of either market failure or another example of the innate increasing instability of the capitalist system1. That vulgar Keynesian2 thinking contributed mightily to the crisis never enters the heads of these economic commentators — but then very little ever does.
These crises are a very old story. David Ricardo and his contemporaries had a far greater understanding of the phenomenon than all the members of the economic commentariat put together, including those with Nobel Prizes. Paul Krugman, for instance, argues that recessions “happens when, for whatever reason, a large part of the private sector tries to increase its cash reserves”3. This is pure baloney. No recession in economic history was ever caused by a sudden demand to increase cash balances. One only has to look at the profits and cash situation of firms in 1929 to see that Krugman’s assertion is completely baseless.
Continue reading Keynesian dogma is creating our economic crises, not the free market part I
30 January 2023
The late Professor Haydn Washington1 was a deep green and like so many deep greens he was an economic illiterate whose idea of a idyllic society was based on the concept of a “steady state economy”, condition that the classical economists called a “stationary state”, an imaginary long-run economic state of affairs in which all economic progress has ceased because the economy has reached, so to speak, its final point of rest. Of all the classical economists John Stuart Mill2 was the only one who welcomed this prospect, not that readers would ever learn that from reading deep green propaganda. Whereas Mill’s3 vision was one of a stationary economy that comes to rest of its own volition the greens’ vision is that of a dystopian nightmare imposed through force and duplicity and ruled by an iron fist.
Continue reading Australian Greens’ lies, distortions and oysters
9 January 2023
Part 1 gave examples of Ricardo’s contemporaries refuting his rent theory. I finished with the Rev. Jones total destruction of Ricardo’s theory of how economic rent emerges. Nevertheless, some economists tried to dismiss the Reverend’s argument on the spurious grounds that Ricardo — at least in the instance of rent — was using a purely historical argument to make a point. This is the line that Wesley C. Mitchell seemed to support when he presented his view that
that Ricardo was not taking into account actual historical circumstances; that his was a schematic, theoretical view of the subject; that… none the less the Ricardian theory of rent remained true…1
This is unbelievable. Ricardo emphatically stated that the best land is always farmed first and that the pressure of population growth would bring marginal lands into cultivation thus creating the differential he called rent. There were no buts or equivocations. He understood that the theory rested entirely on this statement. Once it could be shown that the sequence of events were not as he described them then the theory would collapse. But it should not be forgotten that for his critics the key point was not the existence or non-existence of marginal land but the fact that what really mattered was the land’s productivity. This is why Ludwig von Mises said:
Continue reading AUSTRALIA’S ANTI-GROWTH ANTI-CAPITALIST GREEN PARTY IS SCREAMING FOR A FALLACIOUS RENT RESOURCE TAX PART 2