Friday, September 24, 2004

Even if We have no Reason, Bomb Iraq! 

Author Unknown

If you cannot find Osama, bomb Iraq.
If the markets are a drama, bomb Iraq.
If the terrorists are frisky,
Pakistan is looking shifty,
North Korea is too risky,
Bomb Iraq.

If we have no allies with us, bomb Iraq.
If we think that someone's dissed us, bomb Iraq.
So to hell with the inspections,
Let's look tough for the elections,
Close your mind and take directions,
Bomb Iraq.

It's pre-emptive non-aggression, bomb Iraq.
To prevent this mass destruction, bomb Iraq.
They've got weapons we can't see,
And that's all the proof we need,
If they're not there, well, they must be,
Bomb Iraq.

If you never were elected, bomb Iraq.
If your mood is quite dejected, bomb Iraq.
If you think Saddam's gone mad,
With the weapons that he had,
And he tried to kill your dad,
Bomb Iraq.

If corporate fraud is growin', bomb Iraq.
If your ties to it are showin', bomb Iraq.
If your politics are sleazy,
And hiding that ain't easy,
And your manhood's getting queasy,
Bomb Iraq.

Fall in line and follow orders, bomb Iraq.
For our might knows not our borders, bomb Iraq.
Disagree? We'll call it treason,
Let's make war not love this season,
Even if we have no reason,
Bomb Iraq.

Tuesday, September 21, 2004

Who is chaff? Who is grain? 

I've just been reading about the rankings of Australian economists; but I have to ask -
Are these rankings based on simple lines/words of text in certain selected journals?
Wouldn't a better measure be the extent to which particular economists contributed to the economic - and social - pickle in which we have landed ourselves - or have been landed - domestically and internationally - by following certain policies?
Who devised or supported the misguided economic policies of Hawke/Keating over the 13 years of their "guardianship" of our well-being?
Who in particular was the handyman/were the handymen of Keating as "the best treasurer we ever had"?
Ditto for Howard and Costello - our unfunny Abbott and Costello team - from 1996 to 2004?
Some of the "greats" of the past, in terms of words/lines in mainstream journals, were diminished by time and revelations of the weaknesses of their theories and policies.
Some of course were more kindly treated by history than by their contemporaries; but they tend to be fewer.
I wonder how the "crash" of 2005, if it happens - or the slow slide in our economic fortunes to 2010 or 2015, if that is our melancholy fate - will sift the chaff from the grain of our contemporary economists in the coming months and years?
That may be the sterner test but, happily or sadly, the more valid one.

Saturday, September 18, 2004

Central Banks, Interest Rates and Inflation 

A learned and able professor of economics has suggested to me that the Australian Government should be given "credit" for leaving the Reserve Bank of Australia "alone."
One of the fundamental policy mistakes - probably THE fundamental policy mistake - of the past 35 years has been the belief that a hike in interest rates will cure inflation.
No central bank has yet put us right on this fundamental error. The records of all central banks - the Fed, the BOE, the BOJ, the Australian Reserve, even the Bundesbank about which we were once so full of admiration - have been appalling except over a misleading short term.
A government - any government - should not abdicate its use of what has become the major instrument of economic and financial policy to an institution actually or even notionally outside government control and certainly not to one so misguided as the central banks have shown themselves to be over the decades.
Always - yesterday, today and prospectively tomorrow - the central banks are waiting in the wings to hike interest rates - and in due course, to un-hike them. They will do it at the drop of a hat. They will take action when inflation happens or they will act pre-emptively. They will do it with considerable self-satisfaction. They will be applauded for their admirable discipline. A central bank is, indeed, of good or less repute if it acts quickly - even feverishly - in lifting interest rates up at the slightest hint of inflationary pressures; and if it acts cautiously - preferably with great hesitation - in bringing interest rates down again
Let me be clear: interest-rate hikes do not "cure" inflation; and the man and the institution that started the whole unstable financial shemozzle of the past thirty-five years was George Burns of the Fed when he hiked interest rates in July 1969 and gave us "stagflation" - the short title for more unemployment and more inflation.
For countries like the United States and Australia, hiking and un-hiking interest rates has SEEMED to control inflation. In fact, it has only transferred - shifted - domestic consumer-price increases to deficits in external trade and payments. It has gutted domestic industries and created massive unemployment and underemployment; and of course, by stimulating and then, in turn, devastating asset-price inflation, it has crippled fixed-capital investment and delivered us to a speculative, casino-type, finance-capitalism world economy that has brought a variety of economic, social, political and, ultimately, strategic distortions and instabilities.
Therefore, what we really want is someone who will get our fundamental economic and financial policies right. Then we can only hope that they will be implemented by strong governments of good sense - independent of institutions as unimaginative and untalented as central banks have shown themselves to be.
For Australia, the historic model would be the Labor input to the Royal Commission on Money and Banking of 1936, as implemented by the Banking Act of 1944. The content of today's policies would, seventy years later, necessarily differ in many aspects and details; but the wisdom of the concepts and the determination embodied in the legislation would be in basic harmony with the historic model which was so successful in the quarter century after the Second World War.

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