Tristan, yes there's a sweetspot. But the point is we're nowhere near that sweetspot at the moment, so we shouldn't be acting as if we are. If we've had this discussion before then you should know that. And you should also know that I'm not advocating taking anything to extremes, and that taking it to extremes would by definition put us on the other side of that sweetspot.

Private debt is no more corporate welfare than infrastructure provision is. In both cases it's available to all (existing industries, new industries, people) and enables future expansion and success.

Aiden the point is that the public sector and the tax system are withdrawing 'to make room' for private debt - which is truly out of control. Also you disagree on one point - that of whether or not we need to contain public debt. So is the harsh response necessary? (ie: you call the whole thing 'an idiotic article') I agree that a deficit which is going towards productivity-enhancing infrastructure and services is worth it. But if we go beyond the 'sweet spot' we can come into difficulty. Also that 'sweet spot' is probably best achieved through a mix of debt and tax. But in a way which maximises employment ; and indeed aims for high wage employment. But if the productivity gains are out of proportion with the debt which needs to be serviced then in that case you have a problem.

I'm sorry Tristan, but I have to disagree with you on this one. Spending can be reduced and without cutting essential services, just waste.

Public health could be cut by more than half, just by means testing its users and by replacing paper shuffling bureaucratic empires with regional boards and comparative, best practices outcomes! These pragmatic measures would allow the costly health insurance rebates to be junked!

If then then forces folk with private means to opt for not for profit, members schemes, so much the better for an overstretched budget.

Public education could be trimmed by as much as 30% just by rolling out complete regional autonomy.

And we could claw back at least 70 billion plus P.A, just by eliminating an entirely unnecessary money wasting middle tier of government And the national interest would be served if this were allowed /madeto happen!

Even so, there needs to be root and branch genuine tax reform rather than all the tinkering at the margins, the stuff that pollies are so good at and done just to divide and rule!

Genuine tax reform would allow the Australian people to claw back the 60 billions plus P.A., we are apparently losing to tax havens and offshoring!?

An entirely unavoidable expenditure tax, closes all those loopholes, and the only possible reason for mealy mouthed politicians with no backbone, to simply reject genuine tax reform out of hand?

Yes to Gonski and a NIDIS, and no to the status quo that just keeps kicking the funding can down the road!

Get real and just stop with all the prevaricating, blame shifting, feather bedding and jobs for the mates; and just get it done! If you've run out of real world ideas, you can borrow a few of mine.

Or you could try thinking, even if that means tolerating the burning smell emanating from previously unused cerebral circuits.
Rhrosty.

I'd agree with everything the author has said, but I'll give him credit for replying to posters.

Tristan, either you're explaining things very poorly or you're ignorant of the way money works. It's not as if there's a fixed amount of it around!

The amount of private debt isn't limited by the amount of public debt. The limiting factor's the amount the banks can lend profitably, which depends on how easy it is for the private sector to make money. It also depends on the interest rate; it's easier for business investment to be profitable when the interest rate is lower, and individuals can borrow more at lower interest rates too.

In some situations public sector cuts make room for interest rates to be cut, enabling private debt to be increased without triggering inflation. But at the moment there's already plenty of room for that without any public sector cuts. Far from being out of control, private debt is below the desired level. And when it goes higher, it can be controlled by raising interest rates.

Taxation reduces the amount of money the private sector spends, which means businesses (which depend on spending) receive less money. Therefore raising taxes has a similar effect to raising interest rates. Right now, with interest rates low, inflation low, and private borrowing too low, we don't just need government spending, we need government deficit spending! Spending and raising the tax rate wouldn't have the same reviving effect on the economy.

If we go beyond the sweetspot then of course we should raise taxes and cut spending. But that has very little bearing on our current situation.

While we should always try to maximize our productivity gains, they need not be proportional to our debt.

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Rhosty,

Means testing?!?!? Are you seriously suggesting the people who pay most of the taxes the fund the public health system should be excluded from most of the benefits?

I don't know where you're getting your figures from, but they're ludicrously optimistic!

Some things are more efficiently done at state level than at federal or local level.

No expenditure tax is entirely unavoidable, and the one you've proposed here before would decimate the financial services industry.

I reject "austerity". It's just I don't define austerity as anything remotely similar to this author.

He seems to believe the vast waste of taxpayers contributions now as insufficient largesse to float the economy. Never before have we collected and wasted so much tax. But he seems to think a tiny bit less is austerity.

The answer is to allow individuals to make their own decisions as to what services they want to buy, not the government. The answer is less tax, less spending, less government authoritarianism, less red tape and green tape, less centralised control - and more private provision of services willingly paid for by customers with their own money.

As for the poor unemployed, see my comments on red and green tape, authoritarianism, centralised control etc. The poor/low-skilled can be employed when their wages are less than their value to the employer. It's pretty logical. If that's not enough to live on then welfare can help, but preventing workers from selling their services for less than the authoritarian lefties say it can be sold for (the minimum wage) is a recipe for unemployment and underemployment.

Throwing more money stolen from the taxpayers down the dunny is NEVER the solution to encouraging self reliance. A bit of tough love would be better.