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The Forum > Article Comments > Economic rationalism has little left to offer > Comments

Economic rationalism has little left to offer : Comments

By Andrew Wear, published 6/11/2007

Economic rationalism is looking increasingly irrelevant in Australia.

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Here is a ranking of the "Global Competitiveness Index" ranking for each country for 2006-2007 issued by the "World Economic Forum".

At the top was the US who I think marks one extreme in economic rationalism. The next 5 are Switzerland, Denmark, Sweden, Germany, and Finland who lie at the other end of the spectrum.

We sit at a so/so level ranking of 19. Not bad, but we could do better. It would be nice if we improved by increasing our social cohesiveness rather than promoting a dog eat dog mentality.
Posted by rstuart, Tuesday, 6 November 2007 9:44:17 AM
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Unconscionable economic's marks the practice underlying the so called "rationalism".

America's government national War budget, (it is said), is under-written by China and India. Some 60% or more of it's national budget {?)

With this you can see how the citizens are carrying the pressure and debt.

In Australia we have some cleaning-up to do. Our house-work is becoming increasingly "grimmy" while we refuse to acknowledge the need for Service Administrative Reform (as a whole approach) through the Public Services (especially Health, Manufacturing and Marketing Agriculture and Banking issues) or continue to cling to the ingrained dysfunctions occurring below the national surface.

Have a Go Australia will become the DREAM that ONCE WAS, unless we each STAND UP and deal as a WHOLE NATION to problem solve the issues.

Labor Skills shortages, Poor health and costly servicing, (structural under-employment and other) Wage distribution equity issues, an over-heated economy (inflation looms), a declining export commodities market, the ethic's of military spending over constructive communication and essential servicing infrastructure, an engagement aimed at citizens.

This is all before we talk of the Water crisis and the reasons it has evloved.

The drought and forced to leave our lands, the dis-care of the Youth and Elderly.

The problems and causal elements found in the nations growing private household debt, the causal elements of domestic crime and it's relationship to Drug abuse and indices in Mental Health.

History revisiting itself.

As residents I believe we need to be mindful of the future.

Know that our vote counts and that what we decide will impact the children in the next generations.

Why should our children carry our burden?

I am already resentments towards servicing the population of baby-boomers over the next decades. I see the unnecessary pressure it will create without the support of ground level infrastructure in cities and rural-remote areas.

Civic Health and Wellbeing now, has to be a ECONOMIC National Concern.
Posted by miacat, Tuesday, 6 November 2007 1:43:41 PM
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I wish I was as upbeat in my assessment of economic rationalism's 'decline' as the author. In Victoria we're on the verge of building a private desalination plant - that will drive up the cost of water beyond what is acceptable for low income households and pensioners. This is aside from the private toll roads and the proposed privatisation of education infrastructure. It angers me - as a Labor Party member - that it is left to the conservatives to criticise some Public Private Partnerships. (PPPs)

Those of us on the Left with a social conscience should be speaking out.

Then there's the federal ALP proposing a 'flattening out' of the PAYG income tax scales, including a reduction in the number of tax thresholds. The commitment to a surplus of at least 1% of GDP also means putting aside more than $10 billion every year - some of which would be better placed in infrastructure.

And Labor's IR policy - while a step forward from 'Workchoices', still does not provide anywhere near enough in the way of standards and protections for the vulnerable and the low paid.

With the cost of living spiralling out of control (petrol/transport - feeding into the cost of food; higher energy prices with the introduction of a emissions trading scheme; higher water prices with the development of expensive new water infrastructue), we need stronger labour market regulation at the low end, public ownership of infrastructure and cross-subsidisation for the disadvantaged, and massive reform of welfare.
Posted by Tristan Ewins, Tuesday, 6 November 2007 2:39:43 PM
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The “economic rationalism” this article attacks is a straw man bearing no relationship to what actual economists and policymakers think.

I challenge the author to identify any influential Australian economist who talks approvingly of “trickle down” effects, argues that “any form of cooperation, collaboration or government intervention is harmful as it inhibits competition”, or believes “competition alone will lead to prosperity.”

Of course co-operation is necessary to a successful economy. The opposite of competition is not co-operation but monopoly and regulation – usually due to the intervention of government, and to benefit business at the expense of households.

Economic rationalists don’t think all regulations, or government interventions, or forms of co-operation are bad, only those against the interest of consumers.

When I first arrived in WA in 1989, most fuel stations closed on weekends. To buy petrol on a Sunday we had to buy a newspaper to find which were rostered open, drive several kilometres across metropolitan Perth to the nearest open vendor, then queue for the privilege of paying 20% more than the weekday price.

Supermarkets removed packets containing more than 500g of meat from the shelves at 1pm on Saturdays, because butchers were not allowed to open on Saturday afternoons, and it was deemed unfair that their competitors could sell meat when they could not.

It was almost impossible to buy a small car, because Australian manufacturers did not make them, and the tariff and quota systems in place made it uneconomic to import them.

Australian wages were failing to keep pace with inflation thanks to the deliberate efforts of the government and unions to drive real earnings down under the Accord.

If economic rationalism seems less relevant today it’s because it has largely done its job – the worst of these destructive economic regulations and interventions of the past have been removed, and the economy is far healthier as a result.

Yes, our challenges now are different, and will require different policy approaches. But we can only move into this new paradigm because of the success of the economic reforms in the last one.
Posted by Rhian, Tuesday, 6 November 2007 2:48:26 PM
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I would agree that the major parties have (largely) abandoned economic rationalism, but the justifications for "free trade, privatisation, deregulation, union busting, an insistence on individual responsibility and cutting welfare" still exist. Not to mention the need for further reforms to IR, health, education and taxation.

Moreover, I find it deeply offensive that Rudd and Howard describe themselves as 'economic conservatives' while simultaneously planning to throw taxpayers money around like confetti.
Posted by ed_online, Tuesday, 6 November 2007 7:26:39 PM
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No, 'ed_on line'

There is no such thing as free trade and it will never be justified until there are enforcable minimum standards regarding labour rights, environmental & safety principles and currency manipulation that apply equally to all competitors.

When I studied economics we were taught that international trade brought benefits through ‘comparative advantage’ – nations would develop an export trade in industries where they had an advantage and import where they had a disadvantage.

We were never taught that virtual slavery, zero quality standards, a carte-blanche license to pollute and a shameless policy of constantly devaluing your currency constituted a “comparative advantage” in the real sense of the term.

The current scandals regarding China’s currency and its toxic exports illustrate this point. There are numerous other examples.

From a consumer point of view privatisation has brought zero benefits. Not one privatised entity offers a better or cheaper service than it did under state ownership. Flogging profitable enterprises like Qantas, the Commonwealth Bank and Telstra merely raises revenue in the short-term while further enriching the corporate sector. Privatising a public monopoly is futile.

Deregulation? We are society of laws. “Deregulation” per se signifies nothing unless it specifically refers to the particular regulations concerned and provides a worthy and objective case for removing them.

‘Union-busting’ cannot be justified unless that includes the A.M.A. (the doctor’s union) the association’s that represent lawyers, architects and other professional’s, the Farmer’s Federation and the Business Council.

We are all entitled to freedom of association & the right to collective representation. To deny that to one sector of the community and allow it for others is a base hypocrisy. It is an open declaration that there should be laws that only apply to a certain class of citizens. It is an assault on the democratic assumption of equality and in this case implies an intention to weaken the rights of individual employees for the purpose of exploitation.

More than anything this issue will cost John Howard the election. Which just goes to show that every cloud does have a silver lining.

-Mr Smith
Posted by MrSmith, Wednesday, 7 November 2007 1:39:51 AM
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