A sensible approach to Qantas by Hockey

Comments on Mark Kenny “The storm facing Qantas was one Joe Hockey couldn't ignore”, 13/02/2014, http://www.canberratimes.com.au/federal-politics/political-opinion/the-storm-facing-qantas-was-one-joe-hockey-couldnt-ignore-20140213-32lkr.html

While it is sensible to provide a sovereign debt facility to Qantas in the short term, it would be better to revoke the Qantas sales legislation, particularly the restrictions of foreign ownership, so Qantas can compete with other similar airliners on an equal footing.

Providing such a debt facility can be justified due to the restrictions of the Qantas Sales Act. In that sense, Joe Hockey is not inconsistent at all in his approach to corporate welfares.

It has been a long while since the privatisation of Qantas and many arguments, such as the needs for a national carrier in case of emergence for it to be used in transport Australian worldwide, or excuses underpinning that legislation no longer hold. Irrespective what ownership of Qantas, it can be reasonably expected that it will meet the needs whenever they arise. Further, commercial charted flights can also be used to meet government obligations to its citizens in case of emergencies.
It is time to re-examine that legislation and the federal parliament needs to act and the sooner it does the better for Qantas and the nation. For Qantas it needs to compete on the same footing as other carriers. For the nation it would avoid unnecessary government subsidies to private businesses.
Qantas has been and still is a very good air carrier even in the face of extremely strong competitions particularly in the wake of the GFC. A strengthened position will enable it to perform better.

Health insurance in Australia - a second best solution

Comments on David Uren “Minister shows her unhealthy obsession”, 19/02/2010, http://www.theaustralian.com.au/politics/opinion/minister-shows-her-unhealthy-obsession/story-e6frgd0x-1225831948276

While I am not a fan of health minister Nicola Roxon's direct government regulatory approach to managing the health insurance companies, there are a couple of points in Australia that need to be considered.

One is the issue of the impact of government quasi compulsory insurance (otherwise punished by special levy for income exceeding a level).

The other is the non-competitive nature of the health insurance industry here.

These two issues distort the health insurance industry and consumer choices.

I think a potential solution to these twine issues, that is, to have a default government insurance non profitable organisation to provide a choice for people and to provide a pressure for competitor to private health insurers, so to limit their non competitive behaviours.

Thus, in the presence of government regulatory distortions in the first place, the government should provide a second best solution, as opposed to a heavily regulated approach as it has been for a long time.

Respect consumers' preferences

Comments on Peter A. Petri “Let growth engines drive the recovery”, 12/10/2009, http://www.eastasiaforum.org/2009/10/12/let-growth-engines-drive-the-recovery/

While the new engines of growth sound nice, there might be some significant risks in government policy generated products that so not match consumers' preferences and demand.

If the two go out of steps, there will be potential for huge waste.

Economists, businesses and governments need to study consumer preferences. Unless there are market failures, governments should refrain from intervention.

For example, in terms of savings and consumptions, as long as intertemporal budget constraints are satisfied, consumers’ preferences should be respected.

That is just one point in the current debate of international imbalances many people have got it wrong, or attributed to the wrong causes. Many arguments are simply red herring.

Too big to fail argument half correct and half wrong

Comments on Stephen Bartholomeusz “Lehman: A symptom, not a cause”, 14/09/2009, http://www.businessspectator.com.au/bs.nsf/Article/Lehman-A-symptom-not-a-cause-pd20090914-VV9ZV?OpenDocument&src=sph

If Lehman Brothers had been bailed out as opposed to let it collapse, there would have been no impact on any moral hazard issues.

You have to let some to fail to deter firms from being or becoming too reckless.

One question is that why should government have bailed out so many firms rather than letting them fail and nationalise them to let shareholders lose all their money/investments and to remove all those executives, so to avoid and prevent both systematic failures and moral hazard.

While the logic that some firms are too big to fail has some truth, one has to let those firms bear the consequences of their management.

Let those that would fail to do so and use temporary nationalisation to save the system. Rehabilitate any firms if necessary and then sell them so the taxpayers don't have to bear the costs.

This is a correct measure to deal with such difficult issues.

Government and bureaucrats are abusing economics

Comments on David Burchell “An economist's laugh, but joke's on us”, 7/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26035133-5013479,00.html

The Keynesian’s main approach to macroeconomic policy is to use government expenditures as the main tool to manage the aggregate demand. Since that comes from government, how successful of that demand management depends on the competency and virtue of the government of the day, as well as top economic bureaucrats.

Unfortunately the experience over the past year or so in Australia shows both were not competent enough and the government was too focused on its own election politics as opposed to the nation’s well beings.

The Treasury, the nation’s top economic advisory agency for example, came up with cash handouts that were the dumbest economic strategy to stimulate the demand. Why didn’t it come up with better targeted demand stimulating measures? One can only guess.

The government, on the other hand, came up with the Education Revolution spending to build a school hall or library in each and every school irrespective whether they needed it or not and irrespective school funding needs at all. That has generated huge wastes and inefficiency and now they have a budget overrun and have to increase funding to that program.

The Indigenous Housing projects in the Northern Territory by the federal government is another prime example of how incompetent of both the government and its bureaucratic agencies. So much money and time have been spent and no single house has been built. How competent was that?

While on the other hand, the government is using the crisis as an excuse to increase spending in the name of jobs. Its own doing has been no different in giving some unemployed people and ask them to fill an ABS job survey to say they are employed.

That is not what Keynes had in mind and not true Keynesians are about. That is a gross abuse of economics, economic principles and proper economic and budgetary governance.

Enjoy freedom and don't ask for too much government intervention please

Comments on IAN KIERNAN “Move on bottled water inspires”, 22/07/2009, http://www.canberratimes.com.au/news/opinion/editorial/general/move-on-bottled-water-inspires/1574349.aspx

While government may have a role to play in the issue, it is not clear what the government should or should not do just responding to the single issue bottled water alone.

Ultimately it is each person's responsibility for their own finance. It is generally better for government to interfere with everyone's own life as little as possible. We don’t want the government to become the police looking over our shoulders all the time, do we?

There might be a market failure or externality in the issue of bottled water that may justify for a government intervention. But government may have more important and far-reaching jobs to do than looking at minor individual or specific issues.

We should not think to ask government to intervene in this or that so freely. We should respect ourselves and others to make our own decisions for our own sake.