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2010-05-28

Roskam exposes flaws of Rudd economics

In a featured article in The Australian Financial Review today, 28/05/2010, page 58, John Roskan has an excellent exposition of Rudd's distorted and selective approaches to economics.
Roskam states that Rudd, in his economic essay published in the Monthly in February 2009, went so far in attacking the so called "neo-liberals and their belief in the efficient-market hypothesis", and branded their "economic modelling for causing the global financial crisis".

But now Rudd is using a never tried theoretic modelling involving many assumptions as the basis for his Resource Super Profits Tax.

What Roskam concludes is that "it seems Rudd has no qualms about theoretical models when it's social democrats instead of neo-liberals doing the modelling."

By the way, the AFR editorial, on the same page, is titled: "a way out of the quagmire" and has the following advice to Rudd and Swan and their government:

"The RSPT is nor so neutral after all. Another to dislike the silent partner model is that it merely postpones the risk of fiscal shocks."

"The government needs to examine all these options, and more."

Note: Those options include: Professor Garnaut's suggestion of replacing the RSPT with a version of the petroleum resource rent tax. The "neutral" mentioned above means the Brownian theoretical basis of the RSPT that it does not distorts investment incentives and decisions.

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