So if the free market is responsible for the growth over the past 15 years then the record negative growth over the past 18 months must also be as a result of free market economics. You can't have it both ways. And had it not been for Keynesian intervention that negative growth would have been much more dire.

I thought the 1930s depression was the record negative growth period. Also nearly all commentators have agreed that the 1930s depression was made much worse by the policies of governments increasing tariffs and collapsing the money supply. This time the credit crunch was due to US and UK property booms caused by Greenspan in the US keeping interest rates too low and Blair in the UK removing dividend imputation in 1996.

The thrust of the article is that excessive government intervention in the economy causes both inefficient use of and mis-allocation of resources. As yet the interventions by Obama, Brown and Rudd have not yet worked out but it looks like the UK is going to have a pretty strong rise in domestic interest rates.

To me the argument is simple, compare the economic progress of West & East Germany post WWII. As Friedman said it was one of the instances in the history of economics where a controlled scientific experiment took place.

<<<The concept of giving government a greater role in shaping our economy and society has been tested to destruction and it has never worked.>>gee aint that a kicker[let me put a few things into perspective]

the rail system[govt]..the road system[govt]..ports[govt]...phone.mail.electricity.water,sewrage[govt.govt govt]where would buisness be without them?

but there is more[govt subsidies like the farmers get..[yes and tarrifs]that created an autoindustry[for egsample]...[]or govt subsidy to the pharma industry, or tram's,busses,not to mention cheap electricty/water to electrical generation[and smelters[building dams[think of the hydro-sceme]

but im one against big govt as well[and coorperate welfare]and centralised control..so on to the next quote

<<The result was clear:where governments accounted for below 30 per cent of GDP,the economy grew by more than 4 per cent per year on average.>>OK SO 7 percent seems fine?

so waynes 'predictions' of 4%..are fine

<<On the other hand,governments taking just under half of GDP only managed growth rates of below 3 per cent.>>were no where near half gdp so the point[issue is somewhat spurilous]

<<Roughly speaking,for every 10 per cent of GDP that government consumed,economic growth rates suffered about 1 per cent,according to the OECD.>>>interesting stuff but im not seing why its relitive[is this the quality of news paper reporting?...no wonder there going bust

anyhow i agree big govt is dumb[i would have appriciated some evidence to help me make my case[i suspect the bigger it gets the less effective it gets[and the more we have public servants mates with their noses in the trough..[getting the too generous govt super[govt cars,perks and special travel

we are over gouverned damm it cant you paid bloggers even ,make a better case to suit the headline?

how can we kill off the states?
how can we stop states selling off our assets
are you even trying to make a case[or just filling in some news sheet]

Isn't it quaint how neo-classicals just hate, hate, hate government with such a passion that they think that editing history somehow magically makes their re-writing true.

It is a fact that from WW2 to 1970, unemployment in this country was in the extreme low range, hovering between 1.9% and 3%, growth and nation building went ahead in leaps and bounds and inflation was relatively low. How ironic then that this was also an age of big government "interference" in the economy when governments left and right produced but 1 single surplus budget between them in that entire 30 year stretch - the rest were in deficit. Seen in that context, all these hysterics about defict and debt become ridiculous. Why would the government that issues the currency that everyone else uses have to worry about whether or not it can pay for deficit spending in their very own currency of issue?

As much as the neo-classicals wish it were not so, it is a fact the (federal) government is an utterly crucial part of the economy. Only when the federal government net spends can new currency enter the economy and a manic drive to run up federal surpluses all the time is not responsable, it sets us up for the next downturn and bigger deficits by contracting the money supply. What we have had since 1970 is sharper cycles of boom and bust with unemployment spiking far higher than in the age of deficits, and a permanently heightened unemployment rate (don't forget hidden unemployment - underemployment. Australia in the neo-classical age has a very high rate of casual and part-time jobs, all of which are officially measured as the person being employed).

It is sad that neo-classicals don't veiw situation - one easily fixed with properly targeted government spending - as a social problem of any great consequence.

its the economy stupid
jobs jobs jobs...lol
howhard made govt bigger[despite his promise of making it smaller]

howhard didnt pay off govt debt[him shifting the ownership of telstra/telicom did]..but i will use a quote

<<The spending plans announced in Wayne Swan’s budget are leading Australia down a path that will eventually slow our economic growth. They are also dangerous because of the vast amounts of debt he has planned.>>as many have pointed out its planned spend...aimed to give certainty[the opposition is talking about futuire numbers[labours real dumbness is not bringing the numbers back to the reality of the current debt

<<Public debt of $188 billion would mean annual interest payments of $7.6 billion.>>yes it WOULD mean[in time..but its not the case yet

<<This is money that cannot be spent on hospitals,schools or transport.>>note now the intrest on loans we havnt actually created YET is being sold as a nett loss[little seeing the complete absurdity of when the debt is created thats the very reason it gets created FOR...lol

<<It is also money that will have to be raised in taxes.>>CRAPpp, this is having it BOTHWAYS[either it is being created by lending [or it aint...seeing as were going to be paying intrest[or our children are.,who also will be having the bennifits via better education and health services etc..lol

<<And it is almost twice the amount the government currently spends on infrastructure.>>>lol thats sort of the point, yes currently there is an underspend[mainly because howhard had to give his mates tax cuts[and no death duties[and shift the burden of taxes onto the poor, as we get ever more poor of course the income from the serfs falls

<<Over the past 15 years,Australia enjoyed the benefits of having a comparatively small government,>>MYTH making not supported by the facts healthy public finances,

<<and strong economic growth.>>its a bubble stupid

<<The Treasurer is leading us towards big government,>>began by howhard
<<permanent deficits,>>speculation
<<high debt,>>how about higher equity,quality of life

<<and slow growth>>mate come-on...4 percent

<<As it turns out,this is the very opposite of smart government.>>but very clever reporting..lol

OK I'll join the chorus.
How is it that the Government debt we are entering into is so bad, whereas the record private debt that accumulated under Howard is so good? The massive private debt has lead to government propping up the banking system, real estate, superannuation, etc because if the "free market" were to operate the crash would be monumental and last the next decade.
As another poster pointed out, Australia's current prosperity is based on decades of government nation building that the capitalist system rides on. Lately they have been asking for a free ride, or to put is more accurately, they are transferring wealth from the younger and future generations to themselves now.
The Liberals (and followers) are blaming Labour for a situation that they engineered. (Though I admit that Keating also had a role)
The money markets are now totally dis-functional because the privately run Fed in the US corrupted the free market with stupidly low interest rates when, by rights the cost of money should have been increased. We followed along blindly.
Now the financial sector has bled us dry and created a few more millionaires and billionaires at the expense of a whole generation of middle class families, it is *not* the time to be going "law of the jungle".
All waste is bad: government and private. Spending 30% of GDP fiddling with computer money at the expense of real industry is the real problem.