Economics

How restricted trade hurts people

Trade is the great bringer of peace. Frederic Bastiat once said that “If goods don’t cross borders, armies will”. Restricting trade is one of the greatest acts of self-harm the state inflicts on its people.

The nature of trade is often misunderstood. Nations don’t trade with other nations. Rather, individuals in some nations trade with individuals in other nations. It may seem trifling, but it makes great deal of difference to who bears the cost of damaging trade policies.

There are many ways in which governments all over the world restrict free trade between their citizens and those of foreign countries. Most obvious is tariff barriers. These are portrayed as forcing foreign suppliers to pay a premium to supply goods locally, which consequently makes the foreign supplier more uncompetitive in the local market, saving local jobs. But this could not be further from the truth. The cost of the tariff … Read the rest


Price controls could leave airport users stranded on the tarmac

An Australian Productivity Commission inquiry into the regulation of our country’s airports has raised prospects of price controls and other regulations in a bid to exert control and oversight across the industry. Although well-intentioned, these moves are likely to have unforeseen and undesirable consequences which must be considered prior to the inquiry’s completion and delivery of the Commission’s report to Treasury by June 2019.

Although the allure of regulations might seem appealing to self-professed “champions of the people”, what remains clearer is that optimum results for consumers are best achieved in an environment that promotes free and lively competition – not heavy-handed measures which could prove disastrous for the very people they are intended to benefit.

Firstly, it’s worth noting that the aviation and airports industry is a constantly evolving one which is responsive and adaptive to market trends and consumer demand. It is doubtful that there is an imperative … Read the rest


WTO plain packaging verdict is an assault on liberty

The World Trade Organisation’s (WTO) recent decision to validate Australia’s tobacco plain packaging laws is a colossal setback for liberty. The plain packaging laws which were implemented in 2012, ban logos, stylised images, brands and coloured cigarette packaging in favour of a generic packet with brand names printed in small standardised fonts. The WTO concluded, without considering significant evidence of their ineffectiveness, that Australia’s plain packaging law contributed to improving public health by reducing the use of and exposure to tobacco products and rejected claims that alternative measures would be equally useful. As a result, they declared that the law was still consistent with global trade rules.

The decision to uphold plain packaging laws is an assault on the principles of liberty. Free market capitalism, personal liberty, the ownership of private property and the enjoyment of limited government are being curtailed as a result of the panel’s decision. Strong and … Read the rest


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