Let The Economists Take Over

Which country is C. R. Fay, feted English economic historian, referring to when he said: the people had ‘good fortunes to live in a country where economists are occasionally heeded.’

The United States? Ol’ Blighty? No: he’s talking about Australia. Of the 1930s, unfortunately.

If you can believe it, the Labor party constitution enshrined nationalisation as an objective in their platform until 2013. Just like when you buy plane tickets using modern smartphones and Web 2.0 when the actual computers running the booking system aren’t too far removed from reading punch cards, socialising the means of production was buried beneath talk of social democracy via the free market – even Kevin 07’s mantra of “economic conservatism” was dreaming of cuddles with Red Ted Theodore. (He even had his own Mungana scandal – pink batts.)

He was Hayek in the streets but Keynes in the sheets, to coin a phrase. When the Global Financial Crisis hit shortly after his election (what is it with Labor prime ministers coming in just as global finance goes to hell?) his first instinct was to spend upwards of 1% of GDP – then another $42 billion stimulus two years later.

Slow, steady surpluses devolved into the red quickly, and their rudderless Coalition counterparts did nothing to tame it – and now we’re staring down the barrel of a $1.022 trillion government debt with almost no appetite on either side (if we’re still pretending there’s two sides) to rein it in.

We were threatened at gunpoint to “trust the science” during the pandemic but when it comes to the dismal science, we’re just sort of winging it. We’ve always done it that way. Maybe it’s why we kinda suck?

According to Harvard University Kennedy School’s Economic Complexity Index, which ranks countries by their ability to manufacture and export a diverse range of complex goods and services, Australia’s economic complexity ranks 105^th out of 145 countries, just below Botswana.

Do you want to invent something? Raise capital for some new app that has a clock bolted on to an AI blockchain cloud solution? Don’t bother. Go overseas. If you want to make some real cash, buy a bunch of houses instead. Dig stuff out of the ground; don’t make anything with it though. Well, that was the conventional wisdom, anyway. Australian government has historically shunned boffins who know a lot about something, preferring their own heady smell of Dunning-Kruger style expertise.

German-born Australian economist Heinz Arndt remarked that the Commonwealth “in the 1950s and 1960s had the advice of better economists inside than were to be found outside […] They did not feel the need for outside help, so that university economists were more remote from government than in most other western countries.”

Despite Robert Menzies snuffing out Labor’s lightman on the hill Ben Chifley with promises of V8-powered free enterprise against horse and cart socialism in 1949, Menzies through Treasurer Arthur Fadden retained the counsel of staunch Keynesian economist Sir Douglas Copland, former Prices Commissioner (we really were insane, weren’t we), Vice-Chancellor of the ANU and once and future founder of the Committee for Economic Development of Australia in 1960. Full employment forever and always, inflation… eh, worry about that later. Something about spoons and shovels and ditches come to mind.

Economic historian Alex Millmow described his approach as to “stabilise the economy and ensure a certain measure of security for all… it would be necessary for the nation as a whole to engage in public investment and not be fearful of national debt.” Sounds very, very familiar.

This Keynesian consensus ran through successive Coalition parliaments from Menzies’ election right until McMahon’s defeat in 1972. Funnily enough, tariffs on imports of clothes and cars were cut by 25% overnight by the Whitlam government – on the advice of two economics lecturers: Fred Gruen of the ANU, and Brian Brogan of Monash University. Too bad about the whole big bloated government thing.

Australia has only really experienced significant monetary reform once or twice in its history – most recently being the floating of the Australian dollar in the 1980s by the socialist revolutionaries Hawke and Keating. They encountered dogged bureaucratic resistance yet encouragement from (you guessed it) actual economists.

An actual economist Dr. Jim Chalmers, Ph.D. (on how great Paul Keating was… as a statesman) is not. Whoever he consulted to cook up the CGT changes and negative gearing wasn’t an economist either. Writing in 2023 in lefty rag the Monthly, he penned an essay, “Capitalism after crises.”

He advocated (and still does) for government to involve itself in capital markets to collaborate with enterprises that suit the government’s social and environmental priorities. He calls this ‘values-based capitalism’ which just sounds like microwaved Marxism; it’s a steaming pile when you open the door; if you dare dig a few scoops in, you realise it’s the same cold mushy gruel they’ve been serving up for going on 200 years now. Capitalism weathers crises just fine, Jim; leftist politicians like you stoke and exploit fears. “It’s not just our economic institutions that need renewing and restructuring, but our markets as well,” he wrote. No offence, but it sounds like some fucking commie gobbledygook to me.

When economics is left to economists, we do great things – at least in pieces. When we leave it to politicians and bureaucrats who think they know better – well, we get the 2026 Federal Budget; or worse. Let’s leave the plane flying to the pilots, yeah?