Jesus the great debt-eliminator

At this time of our greatest Christian holy-days, what does the Bible have to say about economics? A lot more than you may think. That's according to the Czech economist Tomas Sedlacek, whose book, Economics of Good and Evil, I'll be heavily relying on in this column. When God expelled Adam and Eve from the Garden of Eden after they had disobeyed him, part of their punishment was that "by the sweat of your brow you will eat...

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Behavioural economics makes more sense to regulators

Pssst ... have you heard about this great new investment product called hybrid securities? They're terrific. Rather than having to choose between high-reward, high-risk shares and low-risk, low-reward bonds and other debt securities, hybrids give you the best of both worlds: high reward, low risk. At least, that's what I think. And it's probably what the outfit that sold me the hybrids wanted me to think. But it's certainly...

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Tax reform needs explanation not spin

Sometimes I think there's no hope for the present crop of politicians - on both sides. When voters react badly to their proposals, they tell themselves there was nothing wrong with the policy, it just wasn't pushed properly. What they should do is call in a policy expert capable of explaining the proposal and the need for it in words the public can readily understand. What they actually do is call in the spin doctors to help...

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Let's be more hard-nosed towards foreign miners

Joe Hockey and Competition and Consumer Commission boss Rod Sims must surely deserve a medal for their selfless devotion to the interests of foreigners, after their shocked reaction to Twiggy Forrest's suggestion that the world's big producers stop the plunge in iron ore prices by limiting their output. And here was me thinking economics was about rational self-interest. Hockey sniffed that the idea smacked of forming a cartel....

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State governments don't greatly affect the economy

With the election over, Sunday is the first day of the rest of the life of the NSW economy under the new Baird government. So how much has changed? A lot less than the rhetoric of the election campaign may have led you to expect. State elections are times when governments claim the credit for all the good things happening in the economy and get blamed by oppositions for all the bad things. In truth, they should get only some...

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A rational analysis of Hockey's 'asset recycling'

I'm never sure who annoy me more, the business types who are certain every business is better run if privately owned, or the lefties who oppose every sale of government-owned businesses on principle. On the question of privatisation, mindless prejudice is no substitute for rational analysis of the pros and cons. On the tricky question of the "asset recycling" being promoted by Joe Hockey to all state governments with businesses...

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Poles and wires: who's misleading us about what

The politicians' decades of bad behaviour may have caused them to lose our trust, but not our mistrust - making us suckers for scare campaigns. This election campaign has been dominated not by reasoned debate but by Labor and the power unions' almighty scare campaign over the sale of the state's electricity poles and wires. It's the most successful scare-job since all the dishonest things Tony Abbott said about how the carbon...

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Should taxpayers develop properties for churches?

Election campaigns are busy times for interest groups. They turn up the pressure on governments and oppositions to give them written promises to grant them particular benefits, or not do things the groups don't fancy, during the next term. It's surprising how often the pollies give in to such tactics. They do so for fear the interest groups will campaign against them if they don't sign on the line. In the last federal election,...

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Budget needs more efficiency, less deficit repression

Joe Hockey's intergenerational report says something I really agree with: "to ensure government expenditure is sustainable and better targeted . . . governments need to focus their efforts on achieving the efficient provision of services". At last, Hockey is acknowledging that we need to reduce the rate of growth in government spending in ways that increase the efficiency of the government's delivery of services. To me – but...

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Why fiscal policy may be making a comeback

For four decades, fiscal policy has been the poor relation among the tools available for countries to use to stabilise demand as their economies move through the ups and downs of the business cycle. Monetary policy has been the preferred instrument. But this may be about to change. Monetary policy refers to the central bank's manipulation of interest rates, whereas fiscal policy refers to the government's manipulation of...

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