Economics

Economics is not a STEM field

Author: Steve Kates

So the US economy is expanding at a 4.1% annual rate and is experiencing a tightening labour market and possibly even rising real wages. That the American economy under PDT would shed the shackles left by eight years of Obama mismanagement and the inept oversight of GWB was as straightforward as anything I could have imagined although never a certainty given all the unknowns that surround every economy all the time. A supply-side approach, in which the government removes regulations and does not try to spend its way to recovery, is the formula that has worked time and again: see, for example, the spectacular Costello recovery of 1996-98 which was driven by massive cuts to public spending and an entrepreneurial-focused policy framework. No Keynesian at the time had expected it – Treasury begged Costello to reverse his policies! – nor have I ever heard a Keynesian who … Read the rest


How you can enter money heaven (and spend money you haven’t got yet)

Money heaven. The state where you can spend money infinitely and indefinitely, where you can forget about “spending less than you earn.”

Until recently, this state of bliss was only possible for governments: if you’re sitting in the Prime Minister’s Lodge, the White House, 10 Downing Street—or even the Kremlin—the idea of spending less than you earn is—how shall put it?—just for the plebs.

Doubt me?

Consider the United States government: from 1901 to 2017 its budget has balanced or been in surplus in just 27 of those 117 years. 22.5% of the time. For a total surplus of $120,372,000,000. Or $4½ billion per surplus year.

But this seriously overstates the achievement of the budget-balancers.

The 90 years of deficits adds up to a whopping negative number of $16,251.4 trillion.

$16¼ trillion!

On average, every year since 1901 the US government has spent $180.8 billion a year more than it … Read the rest


Advance Australia Fair: reforms from the past, challenges for the future

The national anthem of Australia has some very pertinent lyrics to our economic reform and performance path in recent decades. The reference to “free” and “wealth for toil” reflects the many positive economic reforms under Prime Ministers Hawke, Keating and Howard from the mid-1980s to mid-2000s. These were mainly in the areas of trade, finance, labour, tax, pensions and competition. These built on the beginnings of trade and finance reforms under Prime Ministers Whitlam and Fraser from the early-1970s to early-1980s. Unfortunately, from the late-2000s to the present, Australia has largely stalled under Prime Ministers Rudd, Gillard, Abbott and Turnbull. Both major political parties of Labor and Liberal-Nationals share the credit until the mid-2000s, as well as the blame since (see Figure 1). 

Australia’s annual Economic Freedom Index score from 1970 to 2015, compiled by the Fraser Institute, is broadly consistent with this story [see above]. The Fraser index … Read the rest


54 billion reasons why HECS needed reform

Last week the Government secured the required votes in the Senate to pass the Higher Education Support Legislation Amendment (Student Loan Sustainability) Bill 2018. It now looks likely the Government will succeed in passing its proposed changes through the Senate when parliament sits again in August. The amendment will replace the existing HECS-HELP repayment schedule with a new schedule lowering the income at which repayments commence from $55,874 to $45,000.

The changes have been predictably unpopular with students and millennials. Junkee a left-leaning youth news site responded to the news with student focused articles such as, ‘We Asked 7 Students What The HECS Changes Mean To Them’(Spoiler Alert: they all hated the changes and complained that graduates would now be forced to live in poverty).

The HECS-HELP system requires that graduates repay their HECS-HELP debt via the tax system – effectively increasing the amount of tax Read the rest


Can our old-school universities keep up?

One day when we look back through history and try to work out what happened to the universities, we may very well be looking hard at the current decade. At present the tertiary education system is not meeting the needs of students adequately. Complaints about the prohibitively high costs of tuition, overpaid vice-chancellors and senior managers, underemployment of students with certain degrees, the rejection of open intellectual inquiry, and the culture of promoting diversity of external characteristics rather than ideas, all point to a future decline in patronage of universities.

Some universities are trying to stay relevant and cater to the needs of students by differentiating their product from their competitor’s. The University of Melbourne and The University of Western Australia have both structured their degrees in a similar fashion to US schools. General undergraduate degrees precede a postgraduate specialist degree designed to separate you from the pack. The University Read the rest


Trumponomics: what is it exactly?

The White House indirectly touted “Trumponomics” again in a recent press release that featured the following:

The U.S. economy continues its streak of consecutive positive monthly job numbers. The unemployment rate edged down 0.1 percentage point over the month to 3.8 percent. This is the lowest unemployment rate in more than 18 years, and its benefits are being felt broadly across America.

The day before this press release, Dr Stephen Moore of the Heritage Foundation wrote about The Mojo of Trumponomics in Townhall. Early last year, Charles Payne of Townhall Finance covered the Emergence Of Trumponomics. Neither tried to set out what “Trumponomics” exactly is.

Mr Payne did, however, make reference to “Lower Taxes & Regulations = Greater Supply = Higher Employment”. Dr Moore went a bit further by stating that:

One of the key principles of Trumponomics is that faster economic growth can Read the rest


A sugar tax won’t fix the damage done by ‘public health’

A recent TV Program has again raised the issue of a sugar tax. All the usual public health suspects were of course in favour. They also bemoaned the influence of industry whilst complaining that they themselves do not get enough funding and lack clout.

It is difficult to know where to start. Public health is generously funded by government and is not particularly accountable.

Let us be crystal clear. It was not the food industry that introduced low fat dietary guidelines in the absence of any evidence in the early 1980’s. It was not big pharma or big sugar or big food. It was public health.  Whilst pretending to be small and powerless, the reality is that public health leverages the power of big government.

This has been evidenced by trials of doctors such as Garry Fettke in Tasmania and Tim Noakes in South Africa where complaints by elements in … Read the rest


Internet privacy: why the government is not going to help, and what we should do about it

Recent debate around internet privacy and sharing of user data has resulted in  a lot of blame, but no real solutions. The truth is that governments have a vested interest in collecting data on citizens. It may seem like they don’t like their citizen’s data being misused, but in the end it is much easier to ask Facebook for data on an individual than it is to collect it themselves. As consumers, what can we do to stop our data being shared, without giving up on the digital world altogether?

Free As They Want You To Be

Facebook and Google are the two sites from which most internet users begin every session. The amount of data they collect on individuals is staggering, assigning each user a unique ID from which they keep a virtual dossier on every search, every post, every click. They are companies which run for profit, as Read the rest


Are Trump’s tax cuts working?

Better economic performance is the most important reason to adopt pro-growth reforms such as the Tax Cuts and Jobs Act of 2017.

Even small increases in economic growth – especially if sustained over time – can translate into meaningful improvements in living standards.

But there are several reasons why it won’t be easy to “prove” that last year’s tax reform boosted the economy.

And there are probably other factors to mention as well.

The takeaway is that the nation will enjoy good results from the 2017 tax changes, but I fully expect that the class-warfare crowd will claim that any good news is for reasons other than tax reform. And … Read the rest