Drunken sailor economics
By Tim Blair
The Daily Telegraph
February 07, 2009 12:00am
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It might sound counter-intuitive, but that's apparently the way we're supposed to do things these days. And for some time prior.
Over the past 10 years, for example, while the economy roared along, we were told to reduce credit card debt and boost savings.
Now the economy is weakening, we're told to spend like crazy.
In 2007, then opposition treasury spokesman Wayne Swan complained about families struggling to pay credit card debt.
Two years later, he's begging us to hit the shops. If, by the way, the aim of the Government's stimulus exercise was to put cash in retailer pockets, why not give it straight to retailers? Just a thought.
(Also, it's a little bold for any money-grabbing Australian government to tell us how to spend our money when they decide to give some back.
If it's such a great idea for us to buy things, let us keep the cash in the first place. We'd have a hell of lot more, too, without it being processed through the taxation department.)
People facing an increased risk of unemployment might understandably feel disinclined to spend. Moreover, even if everyone who receives their Ruddollars and Kevincents dutifully blows the lot on locally-made goods, there is no certainty that it will solve our economic problems.
That's because these economic problems aren't exclusively ours. It's a global financial crisis, after all.
Just as you can't cure alleged global warming by closing Australian coal plants, you can't repair a global money meltdown by throwing $950 at Bing Lee.
As a measure of Australia's place in global economic terms, consider that the $US819 billion in US President Barack Obama's stimulus plan represents - according to someone armed with a bible and a calculator - nearly $US1 million every day since the birth of Jesus Christ.
By contrast, the Rudd stimulus plan represents $US1 million every day since the birth of Maggie Tabberer.
Who, while admirable in the fields of fashion and publishing, is yet to surprise anyone at Easter.
Despite all of this, we're yet to feel the full impact of the ever-looming crisis.
As much as I'm a fan of extreme capitalism, to use Kevin Rudd's phrase, might it not be a good idea to hang on to some of our billions until precise needs are identified?
Instead, we're getting $4 billion worth of government-funded household insulation.
Ask elderly relatives what they most craved during the Great Depression - chances are it wasn't pink batts, which aren't exactly edible.
As a response to international economic turmoil, loading roofs with fibreglass is one of your more eccentric options. One justification is that it will reduce carbon emissions.
Which gets us back to the other great crisis of our time.
If Rudd is serious about addressing climate change, which he described as "the defining challenge of our generation'', he has the solution right in front of him.
The economic downturn, with a reduction in commerce and therefore emissions, should easily deliver a 5 per cent carbon cut. Probably more.
Instead, he's piling on $42 billion worth of emissions. We've reached a tipping point, as they say. Rudd has tipped against the "defining challenge''.
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