Kohler: A Surplus Of Political Stupidity

14 Aug

From Business Spectator:

Yesterday’s weak employment figures confirm what my colleague Robert Gottliebsen has been arguing for months: that the economy – global and domestic – is much weaker than anyone thought. Forcing the budget back into surplus by 2013 by cutting spending or raising taxes is probably a stupid idea, just as raising interest rates must now be off the agenda.

But the Opposition and the media will now ensure that the most important issue is not how the settings should be adjusted for changed circumstances, but whether the government breaks a promise.

Same goes for the carbon tax. If Oliver Marc Hartwich in today’s KGB roundtable is only half right about the dire future of the European Union and the euro, introducing a carbon tax next July would be the silliest idea imaginable.

All three of the economists on the roundtable – Hartwich, Warren Hogan of ANZ and Su-Lin Ong of RBC – are pessimistic about the global economy. They are not alone. The very best that can be hoped for is that the European and American economies muddle through this new debt crisis and they end up with low growth rather than a recession.

In the circumstances, should the government press on with the planned carbon tax next year? Of course not, unless there is some miraculous renaissance of the developed world economy between now and then.

That looks extremely unlikely. Yet at a Town Hall forum in Perth yesterday, the prime minister vowed to press on with the carbon tax, because Treasury has advised that the economy will continue to grow even if it is imposed.

Right. That’ll be the modelling then. That model on the computers in Langton Crescent, Parkes, in Canberra, a million or so miles from the real world.

Well said.

Very pleasant to see that Alan Kohler has about as much faith in Treasury modelling as I do:

Why Would Any Sane Person Believe Treasury’s Carbon Tax Modelling When Their Budget Forecasting Record Is This Bad?

The Pricing Carbon Choir – Why Should *Any* Sane Person Trust Economists After The GFC?

And as much as Barnaby Joyce does:

Barnaby Bamboozles Chief Of Climate Change Modelling Unit … Again

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One Response to “Kohler: A Surplus Of Political Stupidity”

  1. Tomorrows Serf August 14, 2011 at 12:44 pm #

    “Imagine a Parliament………”

    As a child I believed in Santa Claus and the Tooth Fairy…

    Dream on BI…nothing will change under the current monetary/economic structure.

    However, given the current banking and currency “problem/catastrophe” brewing in Europe and the USA, perhaps we may finally be in store for some real “Change we can believe in…”

    Wearing my black “End the Fed” t-shirt on Tuesday…

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