Comments on Tony Makin “Saddled with legacy of fiscal extravagance”, 30/08/2010, http://www.theaustralian.com.au/national-affairs/saddled-with-legacy-of-fiscal-extravagance/story-fn59niix-1225911594527
While the argument of fiscal extravagance is correct, it is problematic to use the point that "in mainstream macro-economics, arguments in favour of using activist monetary policy, conducted under the auspices of more independent central banks, have dominated arguments for deploying activist fiscal policy", as the support against fiscal extravagance.
Even that point was correct in actual policy effectiveness (it is doubtful at the best) in normal circumstances, the nature of the GFC should question the generality of that point in the wake of the GFC.
Any economists, especially those who prescribe to actual policies, need not to be ideological in theories and need to take into account the differences between the assumptions in a theory and the real world conditions and take a pragmatic approach to policies.
Stiglitz, a strong Keynesian, is probably wrong in his judgement about the appropriateness of Australia’s fiscal policies in the wake of the GFC, some strong monetarists have been also wrong in continue to use the argument against any use of fiscal policy as a tool to deal with the GFC.
Both sides of the macro economists need to be realistic enough to realise some of their views may be wrong or incorrect sometimes!
2010-08-29
Reform to have rules for a hung parliament without back to the polls again
Comments on Peter van Onselen “Back to the ballot box if the talks just drag on”, 28/08/2010, http://www.theaustralian.com.au/national-affairs/commentary/back-to-the-ballot-box-if-the-talks-just-drag-on/story-e6frgd0x-1225911098798
While going back to the polls may be a better option than the current farciful bargains when the nation is at the hands of a few independents, the nation could do better to reform the election, parliament and government systems.
What should the nation do if another election soon also produce a hung?
The nation could do better to reform the election, parliament and government systems to deal effectively with a hung parliament.
The current situation has significant shortcomings:
the nation and the major parties are held hostages by a few handful parliamentarians;
there is a lack of fair and just method for the major parties to form a workable government;
there is a risk that the nation needs to go back to the pool again very soon; and
it is more difficult to have fixed term election.
So, ideally there should be a set of rules to resolve a hung situation when it occurs.
They may involve who should form government unambiguously in a hung, using a cascading rules.
They should also involve how the supply is decided if the government's budget can't be passed. Here there should some rule to let the government function with minimum spending, and some policy proposals not exceeding certain amounts should be allowed once they have passed pre-specified criteria by a parliamentary budget office.
While going back to the polls may be a better option than the current farciful bargains when the nation is at the hands of a few independents, the nation could do better to reform the election, parliament and government systems.
What should the nation do if another election soon also produce a hung?
The nation could do better to reform the election, parliament and government systems to deal effectively with a hung parliament.
The current situation has significant shortcomings:
the nation and the major parties are held hostages by a few handful parliamentarians;
there is a lack of fair and just method for the major parties to form a workable government;
there is a risk that the nation needs to go back to the pool again very soon; and
it is more difficult to have fixed term election.
So, ideally there should be a set of rules to resolve a hung situation when it occurs.
They may involve who should form government unambiguously in a hung, using a cascading rules.
They should also involve how the supply is decided if the government's budget can't be passed. Here there should some rule to let the government function with minimum spending, and some policy proposals not exceeding certain amounts should be allowed once they have passed pre-specified criteria by a parliamentary budget office.
2010-08-27
China's challenges on road to prosperity
Comments on Wing Thye Woo “Avoiding economic crashes on China’s road to prosperity”, 26/07/2010, http://www.eastasiaforum.org/2010/08/26/avoiding-economic-crashes-on-chinas-road-to-prosperity/
The analogue of hardware, software and fuel/power is nice.
I agree that the "software" is likely to be the most important one among the three.
For softwares, China has both severe challenges and blessings, due to its size, speed of growth and its political system.
Challenges come from influences both within the country and abroad.
Blessings is likely in the form of rapidly rising living standards that would allow the government to mitigate domestic political challenges and smooth the political transition processes. How to successfully democratise and what the most optimal path for it is the greatest challenge of all.
That political transition will inevitably be associated and influenced by the state of play in the management of economic growth. In a sense, the interactions between economic management and political transition are likely to be most challenging to China's political leaders.
International challenges are also multi-folds, with the most likely potential challenges coming from hostilities in one form or another to its rapid growth, although from power supply point of view the challenges are not along for China as long as China does its share of responsibilities and obligations in dealing with global challenges like climate change (in which China has probably done more than its share of responsibilities, but it has lacked behind in tactics so a poor impression has been created out of Copenhagen).
The analogue of hardware, software and fuel/power is nice.
I agree that the "software" is likely to be the most important one among the three.
For softwares, China has both severe challenges and blessings, due to its size, speed of growth and its political system.
Challenges come from influences both within the country and abroad.
Blessings is likely in the form of rapidly rising living standards that would allow the government to mitigate domestic political challenges and smooth the political transition processes. How to successfully democratise and what the most optimal path for it is the greatest challenge of all.
That political transition will inevitably be associated and influenced by the state of play in the management of economic growth. In a sense, the interactions between economic management and political transition are likely to be most challenging to China's political leaders.
International challenges are also multi-folds, with the most likely potential challenges coming from hostilities in one form or another to its rapid growth, although from power supply point of view the challenges are not along for China as long as China does its share of responsibilities and obligations in dealing with global challenges like climate change (in which China has probably done more than its share of responsibilities, but it has lacked behind in tactics so a poor impression has been created out of Copenhagen).
An independent budget office and policy analysis
Comments on Sinclair Davidson “Replace this partisan treasury with an independent budget office”, 27/08/2010, http://www.theaustralian.com.au/national-affairs/commentary/replace-this-partisan-treasury-with-an-independent-budget-office/story-e6frgd0x-1225910613675
The state of play has not been satisfactory over the past years.
Bureaucrats are supposed to have dual roles: giving independent advice and serving the government of the day.
It is difficult to be completely independent when the government of the day is your master.
Further, inevitably, many government policy proposals may come from bureaucrats in some sort of version and they have a natural bias and hence thus they have a conflict of interest at hand when do costing of the major parties policy costings.
Also, government has the advantage of using bureaucrats and opposition parties don’t have.
In sort, it is the institutional setting that results in natural advantages and disadvantages to the government and the opposition parties and the natural biases and conflicts of bureaucrats.
Ideally, there should be a much more independent agency to do the costings and scrutinise government policies in general. A Parliamentary Budget Office or the sort may be the way to go.
The state of play has not been satisfactory over the past years.
Bureaucrats are supposed to have dual roles: giving independent advice and serving the government of the day.
It is difficult to be completely independent when the government of the day is your master.
Further, inevitably, many government policy proposals may come from bureaucrats in some sort of version and they have a natural bias and hence thus they have a conflict of interest at hand when do costing of the major parties policy costings.
Also, government has the advantage of using bureaucrats and opposition parties don’t have.
In sort, it is the institutional setting that results in natural advantages and disadvantages to the government and the opposition parties and the natural biases and conflicts of bureaucrats.
Ideally, there should be a much more independent agency to do the costings and scrutinise government policies in general. A Parliamentary Budget Office or the sort may be the way to go.
A need for a Parliamentary Budget Office
Comments on Paul Kelly “Unique chance may be lost to brief distractions”, 27/08/2010, http://www.theaustralian.com.au/national-affairs/commentary/unique-chance-may-be-lost-to-brief-distractions/story-e6frgd0x-1225910632410
The independents have failed to understand the inherent problems of the Charter of Budget Honesty provisions for campaign costing.
They assume that Treasury and Finance are completely independent.
But that is a fatal and unrealistic assumption.
Opposition, whichever party it is at the time of an election, generally does not believe and trust that assumption.
Further, there is an unfair advantage in being government at the time of election, because it has had access to public services for costing/estimates that the opposition have not had.
PS: The following is Kelly first few paragraphs:
"AUSTRALIA risks losing its unique chance for better government.
The the three independents have failed to lodge a firm written request for either a Parliamentary Budget Office or a Debates Commission, both to be established by statute.
This failure is inexplicable. The lesson of this year's election campaign was the need for these two institutional reforms. They are needed because the Charter of Budget Honesty provisions for campaign costing are broken and the farce about leaders' debates demands to be resolved.
The independents can quickly achieve these real and lasting reforms. Yet they seem fixated by distractions - useless talk about "new paradigms", multi-party systems and consensus politics that will not last beyond the current, perhaps brief, parliament."
The independents have failed to understand the inherent problems of the Charter of Budget Honesty provisions for campaign costing.
They assume that Treasury and Finance are completely independent.
But that is a fatal and unrealistic assumption.
Opposition, whichever party it is at the time of an election, generally does not believe and trust that assumption.
Further, there is an unfair advantage in being government at the time of election, because it has had access to public services for costing/estimates that the opposition have not had.
PS: The following is Kelly first few paragraphs:
"AUSTRALIA risks losing its unique chance for better government.
The the three independents have failed to lodge a firm written request for either a Parliamentary Budget Office or a Debates Commission, both to be established by statute.
This failure is inexplicable. The lesson of this year's election campaign was the need for these two institutional reforms. They are needed because the Charter of Budget Honesty provisions for campaign costing are broken and the farce about leaders' debates demands to be resolved.
The independents can quickly achieve these real and lasting reforms. Yet they seem fixated by distractions - useless talk about "new paradigms", multi-party systems and consensus politics that will not last beyond the current, perhaps brief, parliament."
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