Zombie Reaganomics at the Cat

Regular Catallaxy Files commenter Fisky - a combative chap who is nonetheless prone to sudden brain farts like his panicked Malcolm Turnbull spruik - posts today in praise of Reagan and in criticism of Thatcher, re their economic legacies.

The politics of austerity, where conservative governments risk short-to-medium term recessions in order to clean up the fiscal mess of their Left-wing predecessors, should be abandoned. Labor never take responsibility for their irresponsible spending and it is maddening that the Liberals always get suckered into bearing the political costs of being the “mean party”, the tax-hikers and the penny-pinchers. What is needed instead is an unapologetically belt-loosening pro-growth agenda of the kind that carried Reagan to the biggest electoral landslide since WWII, the supply-side economic policies to match, and a simple slogan to knit the whole thing together – such as “Legalise Growth!” or, better still, a resounding “No to Austerity!”

Translated, Fisky is calling for deficits to blow out like they did under Reagan, fuelled in an engineered bubble of Keynesian pump priming to magic up jobs in the public sector regardless of cost benefit analyses, and "worry about fiscal retrenchment later". US government debt as a share of GDP increased from 26.2% in 1980 to 40.9% in 1988, with deficits of a proportional size not seen since WW2.  In Reagan's case, the deficit paid for military build up that did very little for the regular domestic economy. In the case of Australia, where public-debt-to-GDP is still below 15%... well, there are plans for a true NBN lying around, but maybe Fisky wants to cover the Arafura Sea with brand new additions to the OPSOB fleet to enforce Rudd's wildly successful PNG solution?

Joe Hockey is already doing what Fisky wants (and what Reagan did) on the spending side as part of the Australian bipartisan commitment to Keynesianism. Many, many billions of dollars are being poured into roads and medical research, not to mention many hundreds of millions for fighter planes. Hockey maintains some level of decorum on the revenue side, though, and he's not likely to make the same mistakes that Reagan did in kickstarting a generational change in inequality by cutting taxes on those who can most afford it. Hockey will wait it out for bracket creep to inexorably shore up the structural revenue shortfall that happened under Labor, as a responsible Treasurer should.

Fisky is the sort of cheerfully dumb character whom it would be fun to have a beer with and talk a load of old toot, but you'd be seriously worried if he came home with your daughter. Hilarious that he is what passes for an intellectual over at the Cat, because the usual suspects in the comments over there don't even twig that he's calling for a Keynesian spending blowout and have been cheering loudly for leftist policies that even Krugman would think fiscally irresponsible.

If there's any inheritor of the Reagan legacy in Australian federal politics at the moment, it seems to be Clive Palmer with his populist, responsibility-free calls for lower taxes and higher spending. Perhaps Fisky has jumped ship yet again?