Pericles made the point I was wanting to make - that the GFC has made the money market very tight anyway... So it's not a surprise that there's not much interest yet in private finance markets for high speed broadband...

Also - assuming that the result of not investing in super-fast broadband would be a) fewer jobs; and b)missing out on the qualitative benefits of the new technology - I believe the investment is defiantely worth our while...

But even if that were not the case - would you want a private monopoly on such critical infrastructure?

I think in the long term the public good provided by the investment will make it worth the public's while.

Finally: I personally would not have a problem with some form of cross-subsidy. I do not want those on low incomes and welfare to be excluded from super-high-speed broadband...

And again - I think the qualitative improvement in the service - will also make it worth our while...

Peter,

The only answer I can give to such a pre-loaded question is “it didn’t”.

I find your concept of “onus of proof” bemusing. I offer a statement of support for policy action that has been in place for quite some time. You insinuate that such policies have (a) had no net benefit at all, but rather (b) have actually damaged the economy and even destroyed net jobs.

Remembering that we are not hypothesising about what might happen if such policies were introduced but that they actually ARE up and running, I find it strange that you have not jumped at the chance I have offered you to prove to everyone the damage and unemployment that has been created by the stimulus. Surely you have such proof in spades, so why are you holding back?

You do understand that you are the one alluding that the existing programme has thus far failed to cushion the economy at all and has in fact caused unemployment that would not have otherwise occurred? You do understand that this places the onus of proof on you, not anyone else? Yes, I’m sure you do too.

So on that note, let’s hear it. Show us where and how the economy has been damaged by the stimulus. Show us which jobs have been destroyed.

I eagerly await the proof that will bring down Swan and the Rudd government.

I guess that's a no then?

Seriously, how have we become so conditioned to despise government - even democratically elected government - to such an extent that it has become almost an article of faith to so many people that government can't do ANYTHING right? Anything at all. Always and everywhere, if government has had a hand in something, it will inevitably fail miserably, deliver inferior results to private enterprise, cause great harm.

Why do so many people actually believe this? That a dollar spent by government will always be wasted or harmful, yet the SAME dollar spent by private enterprise will always be put to productive, prosperity-generating use.

Even after the spectacular collapse that we all recently witnessed, some are still claiming that this was all the result of government interference. Even after decades of privatisation and deregulation.

Until we re-connect with the notion that government can perform a crucial role that private enterprise by itself cannot - advance the public purpose - we are likely destined for more of the same.

>>Why do so many people actually believe this? That a dollar spent by government will always be wasted or harmful, yet the SAME dollar spent by private enterprise will always be put to productive, prosperity-generating use.<<

Of course, this point is well made. The economy doesn't care where the money comes from, it will still get put to use. The difference between government and industry spending is largely psychological.

Many in industry see themselves as cutting edge and, to their tribal viewpoint, that's all that's important. The truth is they wouldn't be as profitable without a stable society and economy underpinning their activities.

When government acts to financially stump up infrastructure, for example, it is really ensuring that the people who can get things moving are given enough time and protection to do so. Industry usually moves in after the foundations have been laid, the bugs eliminated from the system and when it's obvious the activity has long-term growth potential. In such a case, industry is very much taking advantage of the early work that has been done and capitalising on it. But would they lay their own foundations if the public sector didn't start it for them? In many instances no. It is a classic case of the public sector complementing the private sector (this, in fact, was Liberal Party policy before the 1996 election).

But for that to happen, there must be a phase where the public sector is financed to do its bit, followed by a capitalisation phase carried out by industry. The real whinge of industry is that it's not getting exactly what it wants in the way it wants. But, it ought to know that pretty much everyone is in that same queue.

All

“The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences. The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.”
Economics in One Lesson:http://jim.com/econ/contents.html

You are reiterating the fallacy of the broken window.

Obviously if we count only the benefits and don’t count the costs, anything will seem beneficial - even if it is more destructive, and generates more hardship for all groups.

I presume, Peter Hume, that we should infer that you are the good economist, and we are the bad.

>>“The bad economist sees only what immediately strikes the eye; the good economist also looks beyond... etc etc<<

While it is good that you hold such a high opinion of yourself, you totally mis-apply the broken window fallacy.

Taken in its original context, the broken window fallacy is entirely valid, and correct in every detail.

However, you have chosen to use it in the context of government borrowing, which was absent from Bastiat's tale.

The broken window in question is clearly a loss to that community's collective economy. In precisely the same way that the current stimulus package represents a loss to the Australian economy as a whole.

The accurate analogy would be where the broken window had been paid for by the government, who then proceeded to recoup fro the community as a whole.

It is the least-pain option. The working people trade off some of their future income for the sake of keeping their brothers in work.

We are fully aware that the current stimulus does not come without its cost. That cost is, quite specifically, the allocation of a portion of our future earnings, in the form of taxation. Anyone who thinks that we are witnessing the first ever implementation of the free lunch is deluding themselves.

But that borrowing does have a purpose. And it is to keep the economy moving, while we sort through the debris of previous over-enthusiastic borrowing and lending.

You are obviously from the school of thought (as is my own dear white-haired old mother) that believes that if it doesn't hurt, it isn't doing you good.

With the corollary - that she invariably invoked as she poured hydrogen peroxide over a grazed knee - that the more it hurts, the greater the good.

Your "good economist", who smugly observes the growing misery of mass unemployment, may well be looking at the longer term from an economic perspective. But in the meantime, there will be a good few millions cursing his insufferable sanctimony.