Cities, state and federal policies

Comments on George Megalogenis “Property chip may cripple the country”, 10/10/2009, http://blogs.theaustralian.news.com.au/meganomics/index.php/theaustralian/comments/property_chip_may_cripple_the_country/

George, it is an interesting article touching some profound issues.

However, I have a few comments or questions.

First, the stories of Sydney relative to Melbourne and Brisbane do have an element of reversion to average or mean, as Phil H suggested.

No individual city could monopoly the leader status forever, and sooner or later there would be changes in relativity.

Secondly, the stories of the three cities or states can have a couple of implications in terms of policies.

One is that if it was purely a shift or switch from one to another without any effect on the totality, that is, a zero sum game, then there are virtually no implications for national policies.

However, if the game was a non-zero sum, as it was probably the case, then there are implications not just for national policies but also for individual states as well.

Carr's policy towards immigration was a cause for Sydney's relative decline. If he had implemented a better policy, then the relative decline might have been smaller, that would have had an effect on not only Sydney and NSW but also the total welfare of Australia.

So effectively it was an issue of the quality of policies by a State government on the welfare of that state and the nation.

Thirdly, while Carr and his government's policies were obviously a reason to that case, it is far fetch to link any of the stories to Howard and the federal government back then. On this, you are incorrect that reflects your bias towards the previous government and blaming it for everything even for this completely unrelated issue. Few would think that Howard was involved in particular local issues, especially one state relative to another.

Fourthly, your story of the relative virtues of the Howard and Rudd governments is a bit bordering nonsense. Again you have strong bias - it is your way of seeing through the telescope through the wrong end, not the public.

Don't get me wrong, you may have a better knowledge in economics than the average. But yours is still very limited, it seems.

As one of the commentators argued that the Howard government cut taxes when they could afford to and at the same time reduced the national public debt to zero, while the Rudd government spent the money it did not have and increased the national public debt.

There is no defence of the Rudd government's fiscal recklessness. Yes, no one would argue against fiscal stimulus when the economy needs it. However, it is a completely different story when the money was wasted, as the Australian has exposed in many articles of the wastes in the school spending program, not to mention whether the magnitude of the stimulus was appropriate.

Your argument of the so called structural budget deficit is a recycling of what some others say for convenience without own critical analysis at the best. Why should a government keep taxpayers money when it does not need?

If you have an issue with Howard government's spending or bribes as you like to put it, why don't you blame the Rudd government when it had the opportunities to reduce spending and to stop some tax cuts but it chose not to do so in their first and second budgets?

The structural arguments is no different from arguing that the inventions of electricity, engines, cars etc were responsible for the global warming now we have and they should have not been invented.

Isn't that argument extremely ridiculers and completely nonsensical?