Wednesday, May 7, 2014

Sinclair Davidson, professional kurdaitcha man

RMIT economics professor Sinclair Davidson got his head on 7.30 the other night, attacking the government from the right on its debt levy.
SINCLAIR DAVIDSON, ECONOMICS PROF., RMIT: My view is very similar to Milton Friedman's dictum that there's nothing more permanent than a temporary government program. So I think this temporary program, this temporary tax is going to be with us for quite some time.
SINCLAIR DAVIDSON: Without a doubt in my mind whatsoever, this is a broken promise. Mr Abbott promised before the election, he gave absolute assurances, that the tax burden would be lower under a Coalition Government than it was under the Labor Government.
This is his moment that Ms Gillard had when she stared down the camera and said, "There will be no carbon tax under a government I lead." This is exactly what Mr Abbott is doing.
Ms Gillard never survived from that moment and I think Mr Abbott faces that same problem. Politically it is a disaster for him.
SINCLAIR DAVIDSON: Politicians, who are the people who got us into this budget problem in the first place, should have the kind of incentives to get us out of this problem.
And, for example, you could have a rule whereby while the budget is in deficit that their salaries get cut by 50 per cent and they remain at that level until the budget is back into surplus.
SABRA LANE: In this season of speculation, that's one idea that can safely be ruled out.
SARAH FERGUSON: Sabra Lane reporting.
The first thing that strikes me in what he says is that there is not much economics content, an affliction that also cruels the works of Henry Ergas in The Australian, a fellow Catallaxian. For a bunch of economists, the Australo-Austrian School, or whatever they call themselves, seem to spend a lot of time talking politics and not enough talking straight economics. Perhaps that is because, as Steve from Brisbane details, when their minds do turn to economics they struggle to mount a solid argument.

Sinclair has been running a series of posts on Catallaxy Files running much the same line, similar to the series he ran after the carbon tax was introduced by Gillard Labor in July 2012 and drawing a direct connection between the two issues. If he wants kudos for messaging independence from the Liberal Party, here you go: let it be known that I have awarded you One Kudos Point.

Of course the game's made up and the points don't matter... the points are like Catallaxy Files itself. They talk a lot over there about useful idiots, a phrase popularised in wingnut circles by Ludwig von Mises to describe liberals who ran interference for Lenin and Stalin - but Sinclair is just as useful to Abbott right now as "proof" of the government's centrism. As long as we can still see the scary silhouettes of Davidson and Ergas through the Overton Window, it's in the right spot for a conservative party. Libertarians are the mystical boogeymen used by conservatives to scare liberals into compliance. Does Sinclair know that this is what he is doing on behalf of the centre right, or does he really believe in the extreme silliness he retails?

Speaking of magical thinking, the particularly stupid elements of the right have been openly hoping that the debt levy is some sort of ruse, a false flag operation which will be revealed on budget night to have been just a joke guys, had you going there, sucked you all in didn't I eh? Fairfax's Paul Sheehan has been (indirectly) fanning these flames with an unsourced and uncorroborated assertion on Twitter that the debt levy would be boned. He also pinned the lead balloon on Joe Hockey, setting up a potential fall guy if his prediction does come true but somehow figuring that Hockey will come out smelling like roses.
If this was Labor in government, the wolfpack in Canberra would already be barking for for a spill, Sky News and ABCNews24 would be on it round the clock with journo jerks circling each other for the scoop. But it's the Liberals, who get off scot free and leave Scott (Morrison) free to accumulate backroom numbers without significant scrutiny.

UPDATE: I note that Sheehan has deleted the above tweet implicating Hockey, but not the original one predicting that the debt levy would not proceed. Everyone else in the media is assuming it will go ahead.


  1. After the ETS came in there was a gigantic yawn. It was never an issue in the last election.Basically because clowns like Davidson got the impact badly wrong.

    John Howard broke quite a few promises yet still won elections. Broken promises are around all the time. it is why they are broken.

  2. Abbott is trying to bone the carbon tax and replace it with a debt levy that raises less money on forward estimates. So far he has created a $68 billion budget black hole in eight months. Heckuva job, Tony.

  3. M0nty,

    We should have some sympathy for Sinclair. He cant read graphs nor understands how assumptions can influence them as I have shown.

    Last leak I saw had the tax having a greater impact on Aussie families than the ETS. Also they took the tax on super out of the forward estimates and that took in more revenue at far less cost to the economy.

    I cannot believe there will be a contractionary budget. Even the OECD has warned against it and if they have then Treasury has!

  4. No one in the media is mentioning the loss of revenue from the mining tax, either. The Kouk had a tweet up this afternoon showing that the amount it may yet bring in is not insignificant:

    As I argued at Harry Clarke's, people who bought the Abbott spin that the carbon "tax" and mining tax were the ruination of the economy, and who believed he could bring the budget back into surplus just by spending cuts big enough to offset the revenue being given up for no good reason, just really weren't good at putting two and two together.

    What we lacked in the last election was a Labor Party that could have something like Bill Clinton's great speech in which he set out that the GOP's plan for the budget just made no sense.