Henry is dead right about John Howard's middle class welfare but how can (even) Henry address consumerism with our overall high levels of income?

"I defy any serious economist to find fault with them..."

Fine, but then don't respond to economic criticism by retorting "You can't be serious!!"

The fault I find with them is manifold. This is just more of the Keynesian rubbish that has caused, and is causing, the biggest economic crises in the history of the world. It has caused huge unjust redistributions from the ordinary people to government-created banking cartels and a big corporate priviligentsia. It assumes that government is a kind of superbeing, all-knowing, all-good, and all-competent - an assumption that has no basis in evidence or reason. It assumes without proving that government interventions enrich society while voluntary exchange impoverishes us – the exact opposite of the truth. It ignores the fact that government is based on coercion, and that all it has to offer - ever - is based on force. It ignores the argument from economic calculation which shows that partial socialism, as much as full socialism, is incapable of providing a service that is rational in terms of the evaluations of those paying for, and those consuming it.

1.
There is no need for government to "provide incentives" for people to look after themselves. Guess what? People will do it all by themselves.

2.
"Establish and maintain a tax and welfare system that encourages work, entrepreneurial activity "
All tax and welfare systems intrinsically discourage work and entrepreneurial activity. The way to encourage work and entrepreneurial activity is to stop taxing, restricting and persecuting them!

3. “Maintain the role of an independent central bank with a mandate to control inflation and protect the stability of the financial system.”

Governments’ pretensions to create benefits out of thin air by licensing the banks to, in effect, print money, are false and fraudulent. Central banks are nothing but counterfeiting machines that spread economic chaos and social injustice. They should be abolished.

The very fact that you make Point 4: “limited to declared states of economic emergency” disproves your unspoken *assumption*, which is that government has the competence and trustworthiness to manage the economy in the first place.

Has it ever occurred to you this principle will only give government incentive to find, engineer, or declare states of emergency so as to justify its actions? Sound familiar?

“5. Fiscal stimulus should be focussed on spending and tax policies that encourage Australians to be more productive and internationally competitive.”

Here we see the whole theistic belief system in full flight again. No attempt is made to justify the notion that government would know better how to be more productive, than the people whose money they confiscate to pay for political handouts.

“6. Recapitalisation of companies in trouble should to the maximum extent possible be from market sources. Should market sources fail, and jobs lost might therefore be great in number, recapitalisation by government with taxpayers funds should be in exchange for equity so that taxpayers can recover their investment in due course – 'No bailout without equity'.

The second sentence contradicts the first. The maximum extent of market recapitalization *possible* is 100%. The fact that a company cannot recapitalize from market sources is because PEOPLE DON’T WANT ITS PRODUCTS.

What absurdity to assert as an economic “principle” that governments should buy up and take control of companies BECAUSE they are making losses producing what people don’t want to buy.

If the problem is unemployment – STOP MAKING IT ILLEGAL TO EMPLOY PEOPLE AND STOP REGULATING ENTIRE INDUSTRIES TO DEATH. The idea that employment is intrinsically exploitative is indefensible Marxist rubbish based on the labour theory of value. Yet this underlies the entire industrial relations portfolio. Stop forcing businesses to pay and adminster their employees’ tax and superannuation.

Entirely missing from the author’s principles is the ethical or economic concept of freedom. Here we see the topsy-turvey world of the Keynesian – wealth comes from consumption, tax, debt, spending, handouts, bailouts, and policies to promote the economic equivalent of digging holes and filling them in again.

The one great defect underlying all the author’s theory, is his failure to cognise that everything the coercive sector spends, it first confiscates from the productive sector. Keynesianism is economically and ethically bankrupt.

www.mises.org

Keynesianism is obvoiusly in its death throes. It would be much better to go back to the economic principles of the previous era, which was that economic policy was based on ensuring a five percent real after tax return on a sound investment.

The only certainty in life with Labor is debt and taxes.

In 2010 labor predicted a deficit of $12bn for 2011/12 at the 2011 budget it had grown to $22bn, and at the end of 2011 it is looking like $37bn. A $25bn black hole in one year.

In 2011 the 2012/13 budget prediction was $3.5bn surplus. A few months later they are trying to cut $6bn in spending to get a $1.5bn surplus, and given the inability of Labor to ever meet its own budget let alone ever see a surplus, I would wager a large sum that the May budget will predict a surplus that will never eventuate.

SM give us your reason why a country without shareholders should show a surplus.

579,

Why should a house hold with no share holders save? It is far easier to spend, but eventually the chickens come home to roost. This is precisely what is happening in Europe to all the spendthrift socialist countries.

Dear Peter Hume, Henry is not a Keynesian, so on that basis your whole argument falls in a heap. Did you actually read the article?